TEXTRON INC, 10-Q filed on 4/25/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
 3 Months Ended
Mar. 31, 2018
Apr. 13, 2018
Document and Entity Information    
Entity Registrant Name TEXTRON INC  
Entity Central Index Key 0000217346  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-29  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   256,038,330
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
v3.8.0.1
Consolidated Statements of Operations - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Revenues    
Total revenues $ 3,296 $ 3,093
Costs, expenses and other    
Cost of sales 2,729 2,592
Selling and administrative expense 327 309
Interest expense 41 42
Special charges 0 37
Other components of net periodic benefit cost (credit) (19) (8)
Total costs, expenses and other 3,078 2,972
Income from continuing operations before income taxes 218 121
Income tax expense 29 21
Income from continuing operations 189 100
Income from discontinued operations, net of income taxes   1
Net income $ 189 $ 101
Basic earnings per share    
Continuing operations (in dollars per share) $ 0.73 $ 0.37
Basic earnings per share (in dollars per share) 0.73 0.37
Diluted earnings per share    
Continuing operations (in dollars per share) 0.72 0.37
Diluted earnings per share (in dollars per share) 0.72 0.37
Dividends per share    
Common stock (in dollars per share) $ 0.02 $ 0.02
Manufacturing    
Revenues    
Total revenues $ 3,280 $ 3,075
Finance.    
Revenues    
Finance Revenue $ 16 $ 18
v3.8.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Consolidated Statements of Comprehensive Income    
Net income $ 189 $ 101
Other comprehensive income, net of tax:    
Pension and postretirement benefits adjustments, net of reclassifications 31 24
Foreign currency translation adjustments 42 22
Deferred gains on hedge contracts, net of reclassifications 1 4
Other comprehensive income 74 50
Comprehensive income $ 263 $ 151
v3.8.0.1
Consolidated Balance Sheets - USD ($)
shares in Thousands, $ in Millions
Mar. 31, 2018
Dec. 30, 2017
Assets    
Cash and equivalents $ 836 $ 1,262
Accounts receivable, net 1,110  
Inventories 4,090 4,150
Other current assets 933  
Property, plant and equipment, less accumulated depreciation and amortization of $4,210 and $4,120, respectively 2,711  
Other assets 1,953  
Finance receivables, net 781 819
Total assets 14,968 15,340
Liabilities    
Other current liabilities 2,104  
Total liabilities 9,276 9,693
Shareholders' equity    
Common stock 33 33
Capital surplus 1,710 1,669
Treasury stock (392) (48)
Retained earnings 5,642 5,368
Accumulated other comprehensive loss (1,301) (1,375)
Total shareholders' equity 5,692 5,647
Total liabilities and shareholders' equity $ 14,968 $ 15,340
Common shares outstanding 256,375 261,471
Manufacturing group    
Assets    
Cash and equivalents $ 688 $ 1,079
Accounts receivable, net 1,110 1,363
Inventories 4,090 4,150
Other current assets 933 435
Total current assets 6,821 7,027
Property, plant and equipment, less accumulated depreciation and amortization of $4,210 and $4,120, respectively 2,711 2,721
Goodwill 2,368 2,364
Other assets 1,953 2,059
Total assets 13,853 14,171
Liabilities    
Short-term debt and current portion of long-term debt 16 14
Accounts payable 1,229 1,205
Other current liabilities 2,104 2,441
Total current liabilities 3,349 3,660
Other liabilities 1,908 2,006
Long-term debt 3,083 3,074
Total liabilities 8,340 8,740
Finance group    
Assets    
Cash and equivalents 148 183
Finance receivables, net 781 819
Other assets 186 167
Total assets 1,115 1,169
Liabilities    
Other liabilities 117 129
Debt 819 824
Total liabilities $ 936 $ 953
v3.8.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 30, 2017
Consolidated Balance Sheets    
Accumulated depreciation and amortization $ 4,210 $ 4,120
v3.8.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Cash flows from operating activities    
Net income $ 189 $ 101
Less: Income from discontinued operations   1
Income from continuing operations 189 100
Non-cash items:    
Depreciation and amortization 105 106
Asset impairments   11
Deferred income taxes 2 13
Other, net 32 28
Changes in assets and liabilities:    
Accounts receivable, net 63 (103)
Inventories (128) (122)
Other assets (119) (30)
Accounts payable 15 (102)
Other liabilities (263) (158)
Income taxes, net 9 38
Pension, net (2) 8
Captive finance receivables, net 15 25
Other operating activities, net (3) (5)
Net cash provided by (used in) operating activities of continuing operations (85) (191)
Net cash used in operating activities of discontinued operations   (25)
Net cash provided by (used in) operating activities (85) (216)
Cash flows from investing activities    
Capital expenditures (77) (76)
Net proceeds from corporate-owned life insurance policies 58 22
Net cash used in acquisitions   (318)
Finance receivables repaid 16 15
Other investing activities, net 9 13
Net cash provided by (used in) investing activities 6 (344)
Cash flows from financing activities    
Increase in short-term debt 2 100
Principal payments on long-term debt and nonrecourse debt (19) (38)
Proceeds from long-term debt   362
Purchases of Textron common stock (344) (186)
Dividends paid (5) (6)
Other financing activities, net 8 19
Net cash provided by (used in) financing activities (358) 251
Effect of exchange rate changes on cash and equivalents 11 8
Net decrease in cash and equivalents (426) (301)
Cash and equivalents at beginning of period 1,262 1,298
Cash and equivalents at end of period 836 997
Manufacturing group    
Cash flows from operating activities    
Net income 179 95
Less: Income from discontinued operations   1
Income from continuing operations 179 94
Non-cash items:    
Depreciation and amortization 103 103
Asset impairments   11
Deferred income taxes 2 13
Other, net 32 28
Changes in assets and liabilities:    
Accounts receivable, net 63 (103)
Inventories (128) (122)
Other assets (118) (29)
Accounts payable 15 (102)
Other liabilities (259) (151)
Income taxes, net 13 90
Pension, net (2) 8
Dividends received from Finance group 50  
Other operating activities, net (3) (5)
Net cash provided by (used in) operating activities of continuing operations (53) (165)
Net cash used in operating activities of discontinued operations   (25)
Net cash provided by (used in) operating activities (53) (190)
Cash flows from investing activities    
Capital expenditures (77) (76)
Net proceeds from corporate-owned life insurance policies 58 22
Net cash used in acquisitions   (318)
Other investing activities, net 9 1
Net cash provided by (used in) investing activities (10) (371)
Cash flows from financing activities    
Increase in short-term debt 2 100
Proceeds from long-term debt   347
Purchases of Textron common stock (344) (186)
Dividends paid (5) (6)
Other financing activities, net 8 19
Net cash provided by (used in) financing activities (339) 274
Effect of exchange rate changes on cash and equivalents 11 8
Net decrease in cash and equivalents (391) (279)
Cash and equivalents at beginning of period 1,079 1,137
Cash and equivalents at end of period 688 858
Finance group    
Cash flows from operating activities    
Net income 10 6
Income from continuing operations 10 6
Non-cash items:    
Depreciation and amortization 2 3
Changes in assets and liabilities:    
Other assets (1) (1)
Other liabilities (4) (7)
Income taxes, net (4) (52)
Net cash provided by (used in) operating activities of continuing operations 3 (51)
Net cash provided by (used in) operating activities 3 (51)
Cash flows from investing activities    
Finance receivables repaid 65 76
Finance receivables originated (34) (36)
Other investing activities, net   12
Net cash provided by (used in) investing activities 31 52
Cash flows from financing activities    
Principal payments on long-term debt and nonrecourse debt (19) (38)
Proceeds from long-term debt   15
Dividends paid (50)  
Net cash provided by (used in) financing activities (69) (23)
Net decrease in cash and equivalents (35) (22)
Cash and equivalents at beginning of period 183 161
Cash and equivalents at end of period $ 148 $ 139
v3.8.0.1
Basis of Presentation
 3 Months Ended
Mar. 31, 2018
Basis of Presentation  
Basis of Presentation

 

Note 1.  Basis of Presentation

 

Our Consolidated Financial Statements include the accounts of Textron Inc. (Textron) and its majority-owned subsidiaries.  We have prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the U.S. for interim financial information.  Accordingly, these interim financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements.  The consolidated interim financial statements included in this quarterly report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 30, 2017.  In the opinion of management, the interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

 

In the first quarter of 2018, we adopted Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This standard provides guidance on the classification of certain cash flows and requires companies to classify cash proceeds received from the settlement of corporate-owned life insurance as cash inflows from investing activities. The standard is required to be adopted on a retrospective basis. Prior to adoption of this standard, we classified these proceeds as operating activities in the Consolidated Statements of Cash Flows. Upon adoption, we reclassified $22 million of net cash proceeds for the first quarter of 2017 from operating activities to investing activities.

 

Our financings are conducted through two separate borrowing groups.  The Manufacturing group consists of Textron consolidated with its majority-owned subsidiaries that operate in the Textron Aviation, Bell, Textron Systems and Industrial segments. The Finance group, which also is the Finance segment, consists of Textron Financial Corporation and its consolidated subsidiaries. We designed this framework to enhance our borrowing power by separating the Finance group. Our Manufacturing group operations include the development, production and delivery of tangible goods and services, while our Finance group provides financial services. Due to the fundamental differences between each borrowing group’s activities, investors, rating agencies and analysts use different measures to evaluate each group’s performance.  To support those evaluations, we present balance sheet and cash flow information for each borrowing group within the Consolidated Financial Statements.  All significant intercompany transactions are eliminated from the Consolidated Financial Statements, including retail financing activities for inventory sold by our Manufacturing group and financed by our Finance group.

 

Use of Estimates

We prepare our financial statements in conformity with generally accepted accounting principles, which require us to make estimates and assumptions that affect the amounts reported in the financial statements.  Actual results could differ from those estimates.  Our estimates and assumptions are reviewed periodically, and the effects of changes, if any, are reflected in the Consolidated Statements of Operations in the period that they are determined.

 

 

v3.8.0.1
Summary of Significant Accounting Policies Update
 3 Months Ended
Mar. 31, 2018
Summary of Significant Accounting Policies Update  
Summary of Significant Accounting Policies Update

 

Note 2.  Summary of Significant Accounting Policies Update

 

Our significant accounting policies are included in Note 1 of our Annual Report on Form 10-K for the year ended December 30, 2017.  On December 31, 2017, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606).  Significant changes to our policies resulting from the adoption are provided below. We adopted ASC 606 using the modified retrospective transition method applied to contracts that were not substantially complete at the end of 2017.  We recorded a $90 million adjustment to increase retained earnings to reflect the cumulative impact of adopting this standard at the beginning of 2018, primarily related to certain long-term contracts our Bell segment has with the U.S. Government that converted to the cost-to-cost method for revenue recognition.  The comparative information has not been restated and is reported under the accounting standards in effect for those periods.  A reconciliation of the financial statement line items impacted for the three months ended March 31, 2018 under ASC 606 to the prior accounting standards is provided in Note 16.

 

Revenue Recognition

Revenue is recognized when control of the goods or services promised under the contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as we perform under the contract).  We account for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable.  Contracts are reviewed to determine whether there is one or multiple performance obligations. A performance obligation is a promise to transfer a distinct good or service to a customer and represents the unit of accounting for revenue recognition. For contracts with multiple performance obligations, the expected consideration, or the transaction price, is allocated to each performance obligation identified in the contract based on the relative standalone selling price of each performance obligation.  Revenue is then recognized for the transaction price allocated to the performance obligation when control of the promised goods or services underlying the performance obligation is transferred. Contract consideration is not adjusted for the effects of a significant financing component when, at contract inception, the period between when control transfers and when the customer will pay for that good or service is one year or less.

 

Commercial Contracts

The majority of our contracts with commercial customers have a single performance obligation as there is only one good or service promised or the promise to transfer the goods or services is not distinct or separately identifiable from other promises in the contract.  Revenue is primarily recognized at a point in time, which is generally when the customer obtains control of the asset upon delivery and customer acceptance.  Contract modifications that provide for additional distinct goods or services at the standalone selling price are treated as separate contracts.

 

For commercial aircraft, we contract with our customers to sell fully outfitted fixed-wing aircraft, which may include configuration options.  The aircraft typically represents a single performance obligation and revenue is recognized upon customer acceptance and delivery. For commercial helicopters, our customers generally contract with us for fully functional basic configuration aircraft and control is transferred upon customer acceptance and delivery.  At times, customers may separately contract with us for the installation of accessories and customization to the basic aircraft. If these contracts are entered into at or near the same time of the basic aircraft contract, we assess whether the contracts meet the criteria to be combined.  For contracts that are combined, the basic aircraft and the accessories and customization are typically considered to be distinct, and therefore, are separate performance obligations.  For these contracts, revenue is recognized on the basic aircraft upon customer acceptance and transfer of title and risk of loss and on the accessories and customization upon delivery and customer acceptance.  We utilize observable prices to determine the standalone selling prices when allocating the transaction price to these performance obligations.

 

The transaction price for our commercial contracts reflects our estimate of returns, rebates and discounts, which are based on historical, current and forecasted information.  Amounts billed to customers for shipping and handling are included in the transaction price and generally are not treated as separate performance obligations as these costs fulfill a promise to transfer the product to the customer.  Taxes collected from customers and remitted to government authorities are recorded on a net basis.

 

We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to five years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation.

 

U.S. Government Contracts

Our contracts with the U.S. Government generally include the design, development, manufacture or modification of aerospace and defense products as well as related services.  These contracts, which also include those under the U.S. Government-sponsored foreign military sales program, accounted for approximately 24% of total revenues in 2017.  The customer typically contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability, which often results in the delivery of multiple units.  Accordingly, the entire contract is accounted for as one performance obligation.  In certain circumstances, a contract may include both production and support services, such as logistics and parts plans, which are considered to be distinct in the context of the contract and represent separate performance obligations. When a contract is separated into more than one performance obligation, we generally utilize the expected cost plus a margin approach to determine the standalone selling prices when allocating the transaction price.

 

Our contracts are frequently modified for changes in contract specifications and requirements.  Most of our contract modifications with the U.S. Government are for goods and services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as part of that existing contract.  The effect of these contract modifications on our estimates is recognized using the cumulative catch-up method of accounting.

 

Contracts with the U.S. Government generally contain clauses that provide lien rights to work-in-process along with clauses that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work-in-process. Due to the continuous transfer of control to the U.S. Government, we recognize revenue over the time that we perform under the contract.  Selecting the method to measure progress towards completion requires judgment and is based on the nature of the products or service to be provided.  We generally use the cost-to-cost method to measure progress for our contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.  Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred.

 

The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable.  Certain of our long-term contracts contain incentive fees or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion.  We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.  Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all other information that is reasonably available to us.

 

Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several years, and the estimation of these costs requires substantial judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals.  We review and update our projections of costs quarterly or more frequently when circumstances significantly change.

 

Approximately 80% of our 2017 revenues with the U.S. Government were under fixed-price and fixed-price incentive contracts.  Under the typical payment terms of these contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments of up to 90% of the contract price based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of up to 80% of costs incurred as the work progresses. Because the customer retains a small portion of the contract price until completion of the contract, these contracts generally result in revenue recognized in excess of billings, which we present as contract assets in the Consolidated Balance Sheets. Amounts billed and due from our customers are classified in Accounts receivable, net. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer. For cost-type contracts, we are generally paid for our actual costs incurred within a short period of time.

 

For contracts where revenue is recognized over time, we generally recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting.  This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period.  Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

 

The impact of cumulative catch-up adjustments on both revenues and segment profit recognized in prior periods totaled $40 million and $(12) million in the first quarter of 2018 and 2017, respectively. The resulting impact increased income from continuing operations before income taxes by $40 million ($30 million after tax or $0.12 per diluted share) in the first quarter of 2018 and decreased income from continuing operations before income taxes by $12 million ($8 million after tax or $0.03 per diluted share) in the first quarter of 2017.  For the first quarter of 2018 and 2017, the gross favorable adjustments totaled $56 million and $20 million, respectively, and the gross unfavorable adjustments totaled $16 million and $32 million, respectively.  In the first quarter of 2017, the gross unfavorable adjustments included a $24 million loss related to the Tactical Armoured Patrol Vehicle (TAPV) program due to inefficiencies resulting from production issues.

 

Contract Assets and Liabilities

Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment is no longer conditional on events other than the passage of time. Contract assets are included in Other current assets in the Consolidated Balance Sheet.  Contract liabilities, which are primarily included in Other current liabilities, include deposits, largely from our commercial aviation customers, and billings in excess of revenue recognized.

 

The incremental costs of obtaining a contract with a customer that is expected to be recovered is expensed as incurred when the period to be benefitted is one year or less.

 

Accounts Receivable, Net

Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional.  We maintain an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected, which is based on an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivable and collateral value, if any.

 

Accounting Pronouncements Not Yet Adopted

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases, that requires lessees to recognize all leases with a term greater than 12 months on the balance sheet as right-to-use assets and lease liabilities, while lease expenses would continue to be recognized in the statement of operations in a manner similar to current accounting guidance.  Under the current accounting guidance, we are not required to recognize assets and liabilities arising from operating leases on the balance sheet.  The new standard is effective for our company at the beginning of 2019.  Entities must adopt the standard on a modified retrospective basis whereby it would be applied at the beginning of the earliest comparative year.  While we continue to evaluate the impact of the standard on our consolidated financial statements, we expect that it will materially increase our assets and liabilities on our consolidated balance sheet as we recognize the rights and corresponding obligations related to our operating leases.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses.  The new standard is effective for our company at the beginning of 2020 with early adoption permitted beginning in 2019.  Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date.  We are currently evaluating the impact of the standard on our consolidated financial statements.

 

 

v3.8.0.1
Business Acquisitions
 3 Months Ended
Mar. 31, 2018
Business Acquisitions  
Business Acquisitions

 

Note 3.  Business Acquisitions

 

On March 6, 2017, we completed the acquisition of Arctic Cat Inc. (Arctic Cat), a publicly-held company (NASDAQ: ACAT), pursuant to a cash tender offer for $18.50 per share, followed by a short-form merger.  The cash paid for this business, including repayment of debt and net of cash acquired, totaled $316 million.  Arctic Cat provides a platform to expand our product portfolio and increase our distribution channel to support growth within our Textron Specialized Vehicles business in the Industrial segment.  The operating results of Arctic Cat are included in the Consolidated Statements of Operations since the closing date.

 

We allocated the consideration paid for this business to the assets acquired and liabilities assumed based on their fair values, and recorded $230 million in goodwill, related to expected synergies and the value of the assembled workforce, and $75 million in intangible assets, which included $18 million of indefinite-lived assets related to tradenames.

 

 

v3.8.0.1
Retirement Plans
 3 Months Ended
Mar. 31, 2018
Retirement Plans  
Retirement Plans

 

Note 4.  Retirement Plans

 

In the first quarter of 2018, we adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.  This standard requires companies to present only the service cost component of net periodic benefit cost in operating income in the same line as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost must be presented separately from service cost and excluded from operating income. In addition, only the service cost component is eligible for capitalization into inventory. The change in the amount capitalized into inventory was applied prospectively. The reclassification of the other components of net periodic benefit cost (credit) to a separate line was applied retrospectively using a practical expedient that permits the usage of amounts previously disclosed in the pension and other postretirement benefit plan note for prior periods. As a result, we reclassified $(8) million of other components of net periodic benefit cost (credit) for the first quarter of 2017 from Cost of sales to a separate line item in the Consolidated Statements of Operations.

 

We provide defined benefit pension plans and other postretirement benefits to eligible employees.  The components of net periodic benefit cost for these plans are as follows:

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

Postretirement Benefits
Other Than Pensions

(In millions)

 

March 31,
2018

 

April 1,
2017

 

March 31,
2018

 

April 1,
2017

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$
26

$
25

$
1

$
1

Interest cost

 
77

 
80

 
2

 
3

Expected return on plan assets

 
(138)

 
(126)

 

—

 

—

Amortization of prior service cost (credit)

 
4

 
4

 
(2)

 
(2)

Amortization of net actuarial loss

 
38

 
34

 

—

 

—

 

 

 

 

 

 

 

 

 

Net periodic benefit cost

$
7

$
17

$
1

$
2

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Share-Based Compensation
 3 Months Ended
Mar. 31, 2018
Share-Based Compensation  
Share-Based Compensation

 

Note 5.  Share-Based Compensation

 

Our share-based compensation plans provide stock options, restricted stock, restricted stock units, stock appreciation rights, performance stock, performance share units and other awards.  Compensation expense included in net income for these plans is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Compensation expense

 

 

 

 

$
33

$
20

Income tax benefit

 

 

 

 

 
(7)

 
(7)

 

 

 

 

 

 

 

 

 

Total net compensation expense included in net income

 

 

 

 

$
26

$
13

 

 

 

 

 

 

 

 

 

 

Stock Options

Options to purchase our shares have a maximum term of ten years and generally vest ratably over a three-year period. The stock option compensation cost calculated under the fair value approach is recognized over the vesting period of the stock options.  We estimate the fair value of options granted on the date of grant using the Black-Scholes option-pricing model.  Expected volatilities are based on implied volatilities from traded options on our common stock, historical volatilities and other factors.  The expected term is based on historical option exercise data, which is adjusted to reflect any anticipated changes in expected behavior.

 

The weighted-average fair value of options granted and the assumptions used in our option-pricing model for such grants are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Fair value of options at grant date

 

 

 

 

$
15.83

$
13.80

Dividend yield

 

 

 

 

 
0.1%

 
0.2%

Expected volatility

 

 

 

 

 
26.6%

 
29.2%

Risk-free interest rate

 

 

 

 

 
2.6%

 
1.9%

Expected term (in years)

 

 

 

 

 
4.7

 
4.7

 

 

 

 

 

 

 

 

 

 

The stock option activity during the first quarter of 2018 is provided below:

 

 

 

 

 

 

 

 

 

 

(Options in thousands)

 

 

 

 

 

Number of
Options

 

Weighted-
Average
Exercise
Price

Outstanding at beginning of period

 

 

 

 

 
9,238

$
37.02

Granted

 

 

 

 

 
1,336

 
58.24

Exercised

 

 

 

 

 
(355)

 
(36.57)

Forfeited or expired

 

 

 

 

 
(33)

 
(46.63)

 

 

 

 

 

 

 

 

 

Outstanding at end of period

 

 

 

 

 
10,186

$
39.79

 

 

 

 

 

 

 

 

 

Exercisable at end of period

 

 

 

 

 
6,957

$
34.61

 

 

 

 

 

 

 

 

 

 

At March 31, 2018, our outstanding options had an aggregate intrinsic value of $195 million and a weighted-average remaining contractual life of six years.  Our exercisable options had an aggregate intrinsic value of $169 million and a weighted-average remaining contractual life of five years at March 31, 2018.  The total intrinsic value of options exercised was $8 million and $17 million during the first quarter of 2018 and 2017, respectively.

 

Restricted Stock Units

The activity for restricted stock units payable in both stock and cash during the first quarter of 2018 is provided below:

 

 

 

 

 

 

 

 

 

 

 

 

Units Payable in Stock

 

Units Payable in Cash

(Shares/Units in thousands)

 

Number of
Shares

 

Weighted-
Average Grant
Date Fair Value

 

Number of
Units

 

Weighted-
Average Grant
Date Fair Value

Outstanding at beginning of period, nonvested

 
668

$
40.55

 
1,263

$
40.75

Granted

 
126

 
58.24

 
270

 
58.24

Vested

 
(174)

 
(36.99)

 
(303)

 
(37.50)

Forfeited

 

—

 

—

 
(13)

 
(42.33)

 

 

 

 

 

 

 

 

 

Outstanding at end of period, nonvested

 
620

$
45.15

 
1,217

$
45.42

 

 

 

 

 

 

 

 

 

 

The fair value of the restricted stock unit awards that vested and/or amounts paid under these awards is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Fair value of awards vested

 

 

 

 

$
24

$
24

Cash paid

 

 

 

 

 
18

 
17

 

 

 

 

 

 

 

 

 

 

Performance Share Units

The activity for our performance share units during the first quarter of 2018 is provided below:

 

 

 

 

 

 

 

 

 

 

(Units in thousands)

 

 

 

 

 

Number of
Units

 

Weighted-
Average
Grant Date
Fair Value

Outstanding at beginning of period, nonvested

 

 

 

 

 
485

$
41.34

Granted

 

 

 

 

 
201

 
58.24

 

 

 

 

 

 

 

 

 

Outstanding at end of period, nonvested

 

 

 

 

 
686

$
46.22

 

 

 

 

 

 

 

 

 

 

Cash paid under these awards totaled $11 million and $14 million during the first quarter of 2018 and 2017, respectively.

 

 

v3.8.0.1
Earnings Per Share
 3 Months Ended
Mar. 31, 2018
Earnings Per Share  
Earnings Per Share

 

Note 6.  Earnings Per Share

 

We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common shareholders for each period.  Basic EPS is calculated using the two-class method, which includes the weighted-average number of common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock, including stock options.

 

The weighted-average shares outstanding for basic and diluted EPS are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In thousands)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Basic weighted-average shares outstanding

 

 

 

 

 
260,497

 
270,489

Dilutive effect of stock options

 

 

 

 

 
3,175

 
2,341

 

 

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding

 

 

 

 

 
263,672

 
272,830

 

 

 

 

 

 

 

 

 

 

Stock options to purchase 1.3 million and 1.5 million shares of common stock are excluded from the calculation of diluted weighted-average shares outstanding for the first quarter of 2018 and 2017, respectively, as their effect would have been anti-dilutive.

 

 

v3.8.0.1
Accounts Receivable and Finance Receivables
 3 Months Ended
Mar. 31, 2018
Accounts Receivable and Finance Receivables  
Accounts Receivable and Finance Receivables

 

Note 7.  Accounts Receivable and Finance Receivables

 

Accounts Receivable

Accounts receivable is composed of the following:

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Commercial

 

 

 

 

$
1,001

$
1,007

U.S. Government contracts, including foreign military sales

 

 

 

 

 
137

 
383

 

 

 

 

 

 
1,138

 
1,390

Allowance for doubtful accounts

 

 

 

 

 
(28)

 
(27)

Total

 

 

 

 

$
1,110

$
1,363

 

Upon adoption of ASC 606, unbilled receivables, primarily related to U.S. Government contracts, totaling $203 million were reclassified from accounts receivable to contract assets or liabilities, depending on the net position of the contract, as disclosed in Note 16.

 

Finance Receivables

Finance receivables are presented in the following table:

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Finance receivables

 

 

 

 

$
810

$
850

Allowance for losses

 

 

 

 

 
(29)

 
(31)

 

 

 

 

 

 

 

 

 

Total finance receivables, net

 

 

 

 

$
781

$
819

 

 

 

 

 

 

 

 

 

 

Credit Quality Indicators and Nonaccrual Finance Receivables

We internally assess the quality of our finance receivables based on a number of key credit quality indicators and statistics such as delinquency, loan balance to estimated collateral value and the financial strength of individual borrowers and guarantors.  Because many of these indicators are difficult to apply across an entire class of receivables, we evaluate individual loans on a quarterly basis and classify these loans into three categories based on the key credit quality indicators for the individual loan.  These three categories are performing, watchlist and nonaccrual.

 

We classify finance receivables as nonaccrual if credit quality indicators suggest full collection of principal and interest is doubtful.  In addition, we automatically classify accounts as nonaccrual once they are contractually delinquent by more than three months unless collection of principal and interest is not doubtful.  Accrual of interest income is suspended for these accounts and all cash collections are generally applied to reduce the net investment balance.  Once we conclude that the collection of all principal and interest is no longer doubtful, we resume the accrual of interest and recognize previously suspended interest income at the time either a) the loan becomes contractually current through payment according to the original terms of the loan, or b) if the loan has been modified, following a period of performance under the terms of the modification.  Accounts are classified as watchlist when credit quality indicators have deteriorated as compared with typical underwriting criteria, and we believe collection of full principal and interest is probable but not certain.  All other finance receivables that do not meet the watchlist or nonaccrual categories are classified as performing.

 

Delinquency

We measure delinquency based on the contractual payment terms of our finance receivables.  In determining the delinquency aging category of an account, any/all principal and interest received is applied to the most past-due principal and/or interest amounts due.  If a significant portion of the contractually due payment is delinquent, the entire finance receivable balance is reported in accordance with the most past-due delinquency aging category.

 

Finance receivables categorized based on the credit quality indicators and by the delinquency aging category are summarized as follows:

 

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Performing

 

 

 

 

$
713

$
733

Watchlist

 

 

 

 

 
41

 
56

Nonaccrual

 

 

 

 

 
56

 
61

 

 

 

 

 

 

 

 

 

Nonaccrual as a percentage of finance receivables

 

 

 

 

 
6.91%

 
7.18%

 

 

 

 

 

 

 

 

 

Less than 31 days past due

 

 

 

 

$
751

$
791

31-60 days past due

 

 

 

 

 
28

 
25

61-90 days past due

 

 

 

 

 
22

 
14

Over 90 days past due

 

 

 

 

 
9

 
20

 

 

 

 

 

 

 

 

 

60+ days contractual delinquency as a percentage of finance receivables

 

 

 

 

 
3.83%

 
4.00%

 

 

 

 

 

 

 

 

 

 

Impaired Loans

On a quarterly basis, we evaluate individual finance receivables for impairment in non-homogeneous portfolios and larger balance accounts in homogeneous loan portfolios. A finance receivable is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on our review of the credit quality indicators described above. Impaired finance receivables include both nonaccrual accounts and accounts for which full collection of principal and interest remains probable, but the account’s original terms have been, or are expected to be, significantly modified. If the modification specifies an interest rate equal to or greater than a market rate for a finance receivable with comparable risk, the account is not considered impaired in years subsequent to the modification. Interest income recognized on impaired loans was not significant in the first quarter of 2018 or 2017.

 

A summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment is provided below:

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Recorded investment:

 

 

 

 

 

 

 

 

Impaired loans with related allowance for losses

 

 

 

 

$
18

$
24

Impaired loans with no related allowance for losses

 

 

 

 

 
38

 
70

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

$
56

$
94

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

 

 

 

$
65

$
106

Allowance for losses on impaired loans

 

 

 

 

 
5

 
6

Average recorded investment

 

 

 

 

 
75

 
92

 

 

 

 

 

 

 

 

 

 

A summary of the allowance for losses on finance receivables, based on how the underlying finance receivables are evaluated for impairment, is provided below. The finance receivables reported in this table specifically exclude leveraged leases in accordance with U.S. generally accepted accounting principles.

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Allowance based on collective evaluation

 

 

 

 

$
24

$
25

Allowance based on individual evaluation

 

 

 

 

 
5

 
6

Finance receivables evaluated collectively

 

 

 

 

 
656

 
658

Finance receivables evaluated individually

 

 

 

 

 
56

 
94

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Inventories
 3 Months Ended
Mar. 31, 2018
Inventories  
Inventories

 

Note 8.  Inventories

 

Inventories are composed of the following:

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Finished goods

 

 

 

 

$
1,823

$
1,790

Work in process

 

 

 

 

 
1,512

 
2,238

Raw materials and components

 

 

 

 

 
755

 
804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
4,090

 
4,832

Progress/milestone payments

 

 

 

 

 

—

 
(682)

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

$
4,090

$
4,150

 

 

 

 

 

 

 

 

 

 

Upon adoption of ASC 606, $199 million of inventories, net of progress/milestone payments, primarily related to our U.S. Government contracts, were reclassified from inventories to contract assets or liabilities depending on the net position of the contract, as disclosed in Note 16.

 

 

v3.8.0.1
Warranty Liability
 3 Months Ended
Mar. 31, 2018
Warranty Liability  
Warranty Liability

 

Note 9.  Warranty Liability

 

Changes in our warranty liability are as follows:

                                                                                                                                                                                                                                                            

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Beginning of period

 

 

 

 

$
164

$
138

Provision

 

 

 

 

 
16

 
20

Settlements

 

 

 

 

 
(22)

 
(21)

Acquisitions

 

 

 

 

 
1

 
28

Adjustments*

 

 

 

 

 
9

 
(2)

 

 

 

 

 

 

 

 

 

End of period

 

 

 

 

$
168

$
163

 

 

 

 

 

 

 

 

 

* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.                                                                             

v3.8.0.1
Derivative Instruments and Fair Value Measurements
 3 Months Ended
Mar. 31, 2018
Derivative Instruments and Fair Value Measurements  
Derivative Instruments and Fair Value Measurements

 

Note 10.  Derivative Instruments and Fair Value Measurements

 

We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  We prioritize the assumptions that market participants would use in pricing the asset or liability into a three-tier fair value hierarchy.  This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exist, requiring companies to develop their own assumptions.  Observable inputs that do not meet the criteria of Level 1, which include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2.  Level 3 inputs are those that reflect our estimates about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances.  Valuation techniques for assets and liabilities measured using Level 3 inputs may include methodologies such as the market approach, the income approach or the cost approach and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data.  These unobservable inputs are utilized only to the extent that observable inputs are not available or cost effective to obtain.

 

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

We manufacture and sell our products in a number of countries throughout the world, and, therefore, we are exposed to movements in foreign currency exchange rates.  We primarily utilize foreign currency exchange contracts with maturities of no more than three years to manage this volatility.  These contracts qualify as cash flow hedges and are intended to offset the effect of exchange rate fluctuations on forecasted sales, inventory purchases and overhead expenses. Net gains and losses recognized in earnings and Accumulated other comprehensive loss on cash flow hedges, including gains and losses related to hedge ineffectiveness, were not significant in the periods presented.

 

Our foreign currency exchange contracts are measured at fair value using the market method valuation technique.  The inputs to this technique utilize current foreign currency exchange forward market rates published by third-party leading financial news and data providers.  These are observable data that represent the rates that the financial institution uses for contracts entered into at that date; however, they are not based on actual transactions so they are classified as Level 2.  At March 31, 2018 and December 30, 2017, we had foreign currency exchange contracts with notional amounts upon which the contracts were based of $484 million and $426 million, respectively.  At March 31, 2018, the fair value amounts of our foreign currency exchange contracts were a $11 million asset and a $2 million liability. At December 30, 2017, the fair value amounts of our foreign currency exchange contracts were a $13 million asset and a $7 million liability.

 

We hedge our net investment position in major currencies and generate foreign currency interest payments that offset other transactional exposures in these currencies.  To accomplish this, we borrow directly in foreign currency and designate a portion of foreign currency debt as a hedge of a net investment. We record changes in the fair value of these contracts in other comprehensive income to the extent they are effective as cash flow hedges.  Currency effects on the effective portion of these hedges, which are reflected in the foreign currency translation adjustments within Accumulated other comprehensive loss, were not significant in the periods presented.

 

Assets and Liabilities Not Recorded at Fair Value

The carrying value and estimated fair value of our financial instruments that are not reflected in the financial statements at fair value are as follows:

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

December 30, 2017

(In millions)

 

Carrying
Value

 

Estimated
Fair Value

 

Carrying
Value

 

Estimated
Fair Value

Manufacturing group

 

 

 

 

 

 

 

 

Debt, excluding leases

$
(3,017)

$
(3,073)

$
(3,007)

$
(3,136)

Finance group

 

 

 

 

 

 

 

 

Finance receivables, excluding leases

 
608

 
628

 
643

 
675

Debt

 
(819)

 
(800)

 
(824)

 
(799)

 

 

 

 

 

 

 

 

 

 

Fair value for the Manufacturing group debt is determined using market observable data for similar transactions (Level 2).  The fair value for the Finance group debt was determined primarily based on discounted cash flow analyses using observable market inputs from debt with similar duration, subordination and credit default expectations (Level 2).  Fair value estimates for finance receivables were determined based on internally developed discounted cash flow models primarily utilizing significant unobservable inputs (Level 3), which include estimates of the rate of return, financing cost, capital structure and/or discount rate expectations of current market participants combined with estimated loan cash flows based on credit losses, payment rates and expectations of borrowers’ ability to make payments on a timely basis.

v3.8.0.1
Accumulated Other Comprehensive Loss and Other Comprehensive Income
 3 Months Ended
Mar. 31, 2018
Accumulated Other Comprehensive Loss and Other Comprehensive Income  
Accumulated Other Comprehensive Loss and Other Comprehensive Income

 

Note 11.  Accumulated Other Comprehensive Loss and Other Comprehensive Income

 

The components of Accumulated Other Comprehensive Loss are presented below:

                                                                                                                                                                                                                                                              

 

 

 

 

 

 

 

 

 

(In millions)

 

Pension and
Postretirement
Benefits
Adjustments

 

Foreign
Currency
Translation
Adjustments

 

Deferred
Gains (Losses)
on Hedge
Contracts

 

Accumulated
Other
Comprehensive
Loss

For the three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

$
(1,396)

$
11

$
10

$
(1,375)

Other comprehensive income before reclassifications

 

—

 
42

 
1

 
43

Reclassified from Accumulated other comprehensive loss

 
31

 

—

 

—

 
31

 

 

 

 

 

 

 

 

 

Other comprehensive income

 
31

 
42

 
1

 
74

 

 

 

 

 

 

 

 

 

End of period

$
(1,365)

$
53

$
11

$
(1,301)

 

 

 

 

 

 

 

 

 

For the three months ended April 1, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

$
(1,505)

$
(96)

$
(4)

$
(1,605)

Other comprehensive income before reclassifications

 

—

 
22

 
2

 
24

Reclassified from Accumulated other comprehensive loss

 
24

 

—

 
2

 
26

 

 

 

 

 

 

 

 

 

Other comprehensive income

 
24

 
22

 
4

 
50

 

 

 

 

 

 

 

 

 

End of period

$
(1,481)

$
(74)

$

—

$
(1,555)

 

 

 

 

 

 

 

 

 

 

The before and after-tax components of other comprehensive income are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

April 1, 2017

(In millions)

 

Pre-Tax
Amount

 

Tax
(Expense)
Benefit

 

After-Tax
Amount

 

Pre-Tax
Amount

 

Tax
(Expense)
Benefit

 

After-Tax
Amount

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefits adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net actuarial loss*

$
38

$
(9)

$
29

$
34

$
(12)

$
22

Amortization of prior service cost*

 
2

 

—

 
2

 
2

 

—

 
2

Pension and postretirement benefits adjustments, net

 
40

 
(9)

 
31

 
36

 
(12)

 
24

Deferred gains on hedge contracts:

 

 

 

 

 

 

 

 

 

 

 

 

Current deferrals

 
2

 
(1)

 
1

 
3

 
(1)

 
2

Reclassification adjustments

 

—

 

—

 

—

 
2

 

—

 
2

Deferred gains on hedge contracts, net

 
2

 
(1)

 
1

 
5

 
(1)

 
4

Foreign currency translation adjustments

 
40

 
2

 
42

 
21

 
1

 
22

Total

$
82

$
(8)

$
74

$
62

$
(12)

$
50

*These components of other comprehensive income are included in the computation of net periodic pension cost.  See Note 11 of our 2017 Annual Report on Form 10-K for additional information.               

v3.8.0.1
Special Charges
 3 Months Ended
Mar. 31, 2018
Special Charges  
Special Charges

 

Note 12.  Special Charges

 

In the first quarter of 2017, special charges were related to a 2016 restructuring plan and the Arctic Cat acquisition, which included both restructuring and transaction costs. There were no special charges recorded in the first quarter of 2018.

 

Special charges recorded in the first quarter of 2017 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

Severance
Costs

 

Asset
Impairments

 

Contract
Terminations
and Other

 

Acquisition
Transaction
Costs

 

Total
Special
Charges

Industrial

$
19

$

—

$
3

$
3

$
25

Textron Aviation

 
1

 
10

 

—

 

—

 
11

Textron Systems

 

—

 

—

 
1

 

—

 
1

 

 

 

 

 

 

 

 

 

 

 

 

$
20

$
10

$
4

$
3

$
37

 

 

 

 

 

 

 

 

 

 

 

 

Our restructuring reserve activity for the first quarter of 2018 is summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

Severance
Costs

 

Contract
Terminations
and Other

 

Total

Balance at December 30, 2017

 

 

 

 

$
24

$
20

$
44

Cash paid

 

 

 

 

 
(10)

 
(4)

 
(14)

Provision for 2016 Plan

 

 

 

 

 

—

 
1

 
1

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2018

 

 

 

 

$
14

$
17

$
31

 

 

 

 

 

 

 

 

 

 

 

 

Both plans are substantially completed with the majority of the remaining cash outlays of $31 million expected to be paid in the remainder of 2018.  Severance costs generally are paid on a lump-sum basis and include outplacement costs, which are paid in accordance with normal payment terms.

v3.8.0.1
Income Taxes
 3 Months Ended
Mar. 31, 2018
Income Taxes  
Income Taxes

 

Note 13.  Income Taxes

 

Our effective tax rate for the first quarter of 2018 and 2017 was 13.3% and 17.4%, respectively. In the first quarter of 2018, the effective tax rate was lower than the U.S. federal statutory tax rate of 21%, primarily due to benefits recognized from audit settlements. The effective tax rate for the first quarter of 2017 was lower than the U.S. federal statutory rate of 35%, primarily reflecting benefits recognized from audit settlements and the recognition of excess tax benefits related to share-based compensation.

 

U.S. Tax Reform

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Among other things, the Act reduces the U.S. federal corporate tax rate from 35% to 21% and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred.  We have reasonably estimated the effects of the Act and recorded provisional amounts in the fourth quarter of 2017 to remeasure our U.S. federal deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%, and for the one-time transition tax. The U.S. Government and state tax authorities are expected to continue to issue guidance regarding the Act, which may result in adjustments to our provisional estimates. We are continuing to analyze certain aspects of the Act and may refine our estimates, which could potentially affect the measurement of our net deferred tax assets or give rise to new deferred tax amounts.

 

For the first quarter of 2018, we have not recorded any measurement period adjustments to the provisional estimates recorded at the end of 2017.  The final determination of the remeasurement of our net deferred tax assets and the transition tax will be completed as additional information becomes available, but no later than one year from the enactment date.  Any subsequent adjustments to the provisional amounts will be recorded to current or deferred tax expense in the quarter of 2018 when the analysis is complete.

v3.8.0.1
Commitments and Contingencies
 3 Months Ended
Mar. 31, 2018
Commitments and Contingencies  
Commitments and Contingencies

 

Note 14.  Commitments and Contingencies

 

We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental, safety and health matters.  Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that existing proceedings and claims will have a material effect on our financial position or results of operations.

v3.8.0.1
Segment Information
 3 Months Ended
Mar. 31, 2018
Segment Information  
Segment Information

 

Note 15.  Segment Information

 

We operate in, and report financial information for, the following five business segments: Textron Aviation, Bell, Textron Systems, Industrial and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing segments excludes interest expense, certain corporate expenses and special charges.  The measurement for the Finance segment includes interest income and expense along with intercompany interest income and expense.

 

Our revenues by segment, along with a reconciliation of segment profit to income from continuing operations before income taxes, are included in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Textron Aviation

 

 

 

 

$
1,010

$
970

 

 

 

 

 

 

 

 

 

 Bell

 

 

 

 

 
752

 
697

 

 

 

 

 

 

 

 

 

 Textron Systems

 

 

 

 

 
387

 
416

 

 

 

 

 

 

 

 

 

 Industrial

 

 

 

 

 
1,131

 
992

 Finance

 

 

 

 

 
16

 
18

 

 

 

 

 

 

 

 

 

Total revenues

 

 

 

 

$
3,296

$
3,093

 

 

 

 

 

 

 

 

 

Segment Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Textron Aviation

 

 

 

 

$
72

$
36

 

 

 

 

 

 

 

 

 

 Bell

 

 

 

 

 
87

 
83

 

 

 

 

 

 

 

 

 

 Textron Systems

 

 

 

 

 
50

 
20

 

 

 

 

 

 

 

 

 

 Industrial

 

 

 

 

 
64

 
76

 Finance

 

 

 

 

 
6

 
4

 

 

 

 

 

 

 

 

 

Segment profit

 

 

 

 

 
279

 
219

 

 

 

 

 

 

 

 

 

Corporate expenses and other, net

 

 

 

 

 
(27)

 
(27)

 

 

 

 

 

 

 

 

 

Interest expense, net for Manufacturing group

 

 

 

 

 
(34)

 
(34)

Special charges

 

 

 

 

 

—

 
(37)

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

 

 

$
218

$
121

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Revenues
 3 Months Ended
Mar. 31, 2018
Revenues  
Revenues

Note 16. Revenues

 

Disaggregation of Revenues

Our revenues disaggregated by major product type for the three months ended March 31, 2018 are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

Aircraft

 

 

 

 

 

 

 

 

 

 

$
634

Aftermarket parts and services

 

 

 

 

 

 

 

 

 

 

 
376

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Aviation

 

 

 

 

 

 

 

 

 

 

 
1,010

 

 

 

 

 

 

 

 

 

 

 

 

 

Military aircraft and support programs

 

 

 

 

 

 

 

 

 

 

 
487

Commercial helicopters, parts and services

 

 

 

 

 

 

 

 

 

 

 
265

 

 

 

 

 

 

 

 

 

 

 

 

 

Bell

 

 

 

 

 

 

 

 

 

 

 
752

 

 

 

 

 

 

 

 

 

 

 

 

 

Unmanned systems

 

 

 

 

 

 

 

 

 

 

 
170

Marine and land systems

 

 

 

 

 

 

 

 

 

 

 
92

Simulation, training and other

 

 

 

 

 

 

 

 

 

 

 
125

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Systems

 

 

 

 

 

 

 

 

 

 

 
387

 

 

 

 

 

 

 

 

 

 

 

 

 

Fuel systems and functional components

 

 

 

 

 

 

 

 

 

 

 
655

Specialized vehicles

 

 

 

 

 

 

 

 

 

 

 
348

Tools and test equipment

 

 

 

 

 

 

 

 

 

 

 
128

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

 

 

 

 

 
1,131

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

 

 

 

 

 

 

 

 

 

 
16

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

 

 

 

 

 

 

 

 

$
3,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our revenues by customer type and geographic location for the three months ended March 31, 2018 are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

Textron
Aviation

 

Bell

 

Textron
Systems

 

Industrial

 

Finance

 

Total

Customer type:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$
973

$
252

$
127

$
1,124

$
16

$
2,492

U.S. Government

 
37

 
500

 
260

 
7

 

—

 
804

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$
1,010

$
752

$
387

$
1,131

$
16

$
3,296

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic location:

 

 

 

 

 

 

 

 

 

 

 

 

United States

$
665

$
509

$
287

$
496

$
7

$
1,964

International

 
345

 
243

 
100

 
635

 
9

 
1,332

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$
1,010

$
752

$
387

$
1,131

$
16

$
3,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Remaining Performance Obligations

Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts.  These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts.  At March 31, 2018, we had $6.5 billion in remaining performance obligations of which we expect to recognize revenues of approximately 90% through 2019, 7% through 2020, and the balance thereafter.

 

Contract assets and liabilities

Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period.  At March 31, 2018, contract assets and liabilities totaled $500 million and $1.1 billion, respectively.  Upon adoption of ASC 606 on December 31, 2017, contract assets and liabilities related to our contracts with customers were $429 million and $1.0 billion, respectively.  During the first quarter of 2018, we recognized $322 million in revenues that were included in the contract liability balance at the adoption date.

 

Reconciliation of ASC 606 to Prior Accounting Standards

The amount by which each financial statement line item is affected in 2018 as a result of applying the new accounting standard as discussed in Note 2 is presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

(In millions)

 

 

 

 

 

As Reported

 

Effect of the
adoption of
ASC 606

 

Under Prior
Accounting

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

 

 

$
1,110

$
212

$
1,322

Inventories

 

 

 

 

 
4,090

 
290

 
4,380

Other current assets

 

 

 

 

 
933

 
(512)

 
421

Property, plant and equipment, net

 

 

 

 

 
2,711

 
6

 
2,717

Other assets

 

 

 

 

 
1,953

 
31

 
1,984

Total Manufacturing group assets

 

 

 

 

 
13,853

 
27

 
13,880

Total assets

 

 

 

 

 
14,968

 
27

 
14,995

Other current liabilities

 

 

 

 

 
2,104

 
134

 
2,238

Total Manufacturing group liabilities

 

 

 

 

 
8,340

 
134

 
8,474

Total liabilities

 

 

 

 

 
9,276

 
134

 
9,410

Retained earnings

 

 

 

 

 
5,642

 
(107)

 
5,535

Total shareholders’ equity

 

 

 

 

 
5,692

 
(107)

 
5,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31, 2018

 

 

 

 

 

(In millions, except per share amounts)

 

 

 

As Reported

 

Effect of the
adoption of
ASC 606

 

Under Prior
Accounting

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing revenues

 

 

$
3,280

$
(221)

$
3,059

Total revenues

 

 

 
3,296

 
(221)

 
3,075

Cost of sales

 

 

 
2,729

 
(198)

 
2,531

Income from continuing operations before income taxes

 

 

 
218

 
(23)

 
195

Income tax expense

 

 

 
29

 
(6)

 
23

Income from continuing operations

 

 

 
189

 
(17)

 
172

Net income

 

 

 
189

 
(17)

 
172

Basic earnings per share - continuing operations

 

 

$
0.73

$
(0.07)

$
0.66

Diluted earnings per share - continuing operations

 

 

 
0.72

 
(0.07)

 
0.65

 

 

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

$
74

$
(17)

$
57

Comprehensive income

 

 

 
263

 
(17)

 
246

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$
189

$
(17)

$
172

Income from continuing operations

 

 

 
189

 
(17)

 
172

Adjustments to reconcile income from continuing operations
to net cash used in operating activities:

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

 
2

 
(6)

 
(4)

Accounts receivable, net

 

 

 
63

 
(9)

 
54

Inventories

 

 

 
(128)

 
(91)

 
(219)

Other assets

 

 

 
(119)

 
75

 
(44)

Other liabilities

 

 

 
(263)

 
48

 
(215)

Net cash used in operating activities of continuing operations

 

 

 
(85)

 

—

 
(85)

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Subsequent Event
 3 Months Ended
Mar. 31, 2018
Subsequent Event  
Subsequent Event

 

Note 17. Subsequent Event

 

On April 18, 2018, we entered into a definitive agreement to sell the businesses that manufacture and sell the products in our Tools and Test Equipment product line within our Industrial segment to Emerson Electric Co. for approximately $810 million in cash.  We expect to close in the third quarter of 2018, subject to regulatory approvals and other customary closing conditions. The net proceeds from the sale are expected to be used to fund additional share repurchases.

 

v3.8.0.1
Summary of Significant Accounting Policies Update (Policies)
 3 Months Ended
Mar. 31, 2018
Summary of Significant Accounting Policies Update  
Revenue Recognition

 

Revenue Recognition

Revenue is recognized when control of the goods or services promised under the contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as we perform under the contract).  We account for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable.  Contracts are reviewed to determine whether there is one or multiple performance obligations. A performance obligation is a promise to transfer a distinct good or service to a customer and represents the unit of accounting for revenue recognition. For contracts with multiple performance obligations, the expected consideration, or the transaction price, is allocated to each performance obligation identified in the contract based on the relative standalone selling price of each performance obligation.  Revenue is then recognized for the transaction price allocated to the performance obligation when control of the promised goods or services underlying the performance obligation is transferred. Contract consideration is not adjusted for the effects of a significant financing component when, at contract inception, the period between when control transfers and when the customer will pay for that good or service is one year or less.

 

Commercial Contracts

The majority of our contracts with commercial customers have a single performance obligation as there is only one good or service promised or the promise to transfer the goods or services is not distinct or separately identifiable from other promises in the contract.  Revenue is primarily recognized at a point in time, which is generally when the customer obtains control of the asset upon delivery and customer acceptance.  Contract modifications that provide for additional distinct goods or services at the standalone selling price are treated as separate contracts.

 

For commercial aircraft, we contract with our customers to sell fully outfitted fixed-wing aircraft, which may include configuration options.  The aircraft typically represents a single performance obligation and revenue is recognized upon customer acceptance and delivery. For commercial helicopters, our customers generally contract with us for fully functional basic configuration aircraft and control is transferred upon customer acceptance and delivery.  At times, customers may separately contract with us for the installation of accessories and customization to the basic aircraft. If these contracts are entered into at or near the same time of the basic aircraft contract, we assess whether the contracts meet the criteria to be combined.  For contracts that are combined, the basic aircraft and the accessories and customization are typically considered to be distinct, and therefore, are separate performance obligations.  For these contracts, revenue is recognized on the basic aircraft upon customer acceptance and transfer of title and risk of loss and on the accessories and customization upon delivery and customer acceptance.  We utilize observable prices to determine the standalone selling prices when allocating the transaction price to these performance obligations.

 

The transaction price for our commercial contracts reflects our estimate of returns, rebates and discounts, which are based on historical, current and forecasted information.  Amounts billed to customers for shipping and handling are included in the transaction price and generally are not treated as separate performance obligations as these costs fulfill a promise to transfer the product to the customer.  Taxes collected from customers and remitted to government authorities are recorded on a net basis.

 

We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to five years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation.

 

U.S. Government Contracts

Our contracts with the U.S. Government generally include the design, development, manufacture or modification of aerospace and defense products as well as related services.  These contracts, which also include those under the U.S. Government-sponsored foreign military sales program, accounted for approximately 24% of total revenues in 2017.  The customer typically contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability, which often results in the delivery of multiple units.  Accordingly, the entire contract is accounted for as one performance obligation.  In certain circumstances, a contract may include both production and support services, such as logistics and parts plans, which are considered to be distinct in the context of the contract and represent separate performance obligations. When a contract is separated into more than one performance obligation, we generally utilize the expected cost plus a margin approach to determine the standalone selling prices when allocating the transaction price.

 

Our contracts are frequently modified for changes in contract specifications and requirements.  Most of our contract modifications with the U.S. Government are for goods and services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as part of that existing contract.  The effect of these contract modifications on our estimates is recognized using the cumulative catch-up method of accounting.

 

Contracts with the U.S. Government generally contain clauses that provide lien rights to work-in-process along with clauses that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work-in-process. Due to the continuous transfer of control to the U.S. Government, we recognize revenue over the time that we perform under the contract.  Selecting the method to measure progress towards completion requires judgment and is based on the nature of the products or service to be provided.  We generally use the cost-to-cost method to measure progress for our contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.  Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred.

 

The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable.  Certain of our long-term contracts contain incentive fees or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion.  We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.  Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all other information that is reasonably available to us.

 

Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several years, and the estimation of these costs requires substantial judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals.  We review and update our projections of costs quarterly or more frequently when circumstances significantly change.

 

Approximately 80% of our 2017 revenues with the U.S. Government were under fixed-price and fixed-price incentive contracts.  Under the typical payment terms of these contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments of up to 90% of the contract price based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of up to 80% of costs incurred as the work progresses. Because the customer retains a small portion of the contract price until completion of the contract, these contracts generally result in revenue recognized in excess of billings, which we present as contract assets in the Consolidated Balance Sheets. Amounts billed and due from our customers are classified in Accounts receivable, net. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer. For cost-type contracts, we are generally paid for our actual costs incurred within a short period of time.

 

For contracts where revenue is recognized over time, we generally recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting.  This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period.  Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

 

The impact of cumulative catch-up adjustments on both revenues and segment profit recognized in prior periods totaled $40 million and $(12) million in the first quarter of 2018 and 2017, respectively. The resulting impact increased income from continuing operations before income taxes by $40 million ($30 million after tax or $0.12 per diluted share) in the first quarter of 2018 and decreased income from continuing operations before income taxes by $12 million ($8 million after tax or $0.03 per diluted share) in the first quarter of 2017.  For the first quarter of 2018 and 2017, the gross favorable adjustments totaled $56 million and $20 million, respectively, and the gross unfavorable adjustments totaled $16 million and $32 million, respectively.  In the first quarter of 2017, the gross unfavorable adjustments included a $24 million loss related to the Tactical Armoured Patrol Vehicle (TAPV) program due to inefficiencies resulting from production issues.

 

Contract Assets and Liabilities

 

Contract Assets and Liabilities

Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment is no longer conditional on events other than the passage of time. Contract assets are included in Other current assets in the Consolidated Balance Sheet.  Contract liabilities, which are primarily included in Other current liabilities, include deposits, largely from our commercial aviation customers, and billings in excess of revenue recognized.

 

The incremental costs of obtaining a contract with a customer that is expected to be recovered is expensed as incurred when the period to be benefitted is one year or less.

 

Accounts Receivable, Net

 

Accounts Receivable, Net

Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional.  We maintain an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected, which is based on an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivable and collateral value, if any.

 

Accounting Pronouncements Not Yet Adopted

 

Accounting Pronouncements Not Yet Adopted

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases, that requires lessees to recognize all leases with a term greater than 12 months on the balance sheet as right-to-use assets and lease liabilities, while lease expenses would continue to be recognized in the statement of operations in a manner similar to current accounting guidance.  Under the current accounting guidance, we are not required to recognize assets and liabilities arising from operating leases on the balance sheet.  The new standard is effective for our company at the beginning of 2019.  Entities must adopt the standard on a modified retrospective basis whereby it would be applied at the beginning of the earliest comparative year.  While we continue to evaluate the impact of the standard on our consolidated financial statements, we expect that it will materially increase our assets and liabilities on our consolidated balance sheet as we recognize the rights and corresponding obligations related to our operating leases.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses.  The new standard is effective for our company at the beginning of 2020 with early adoption permitted beginning in 2019.  Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date.  We are currently evaluating the impact of the standard on our consolidated financial statements.

 

v3.8.0.1
Retirement Plans (Tables)
 3 Months Ended
Mar. 31, 2018
Retirement Plans  
Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

Pension Benefits

Postretirement Benefits
Other Than Pensions

(In millions)

 

March 31,
2018

 

April 1,
2017

 

March 31,
2018

 

April 1,
2017

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$
26

$
25

$
1

$
1

Interest cost

 
77

 
80

 
2

 
3

Expected return on plan assets

 
(138)

 
(126)

 

—

 

—

Amortization of prior service cost (credit)

 
4

 
4

 
(2)

 
(2)

Amortization of net actuarial loss

 
38

 
34

 

—

 

—

 

 

 

 

 

 

 

 

 

Net periodic benefit cost

$
7

$
17

$
1

$
2

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Share-Based Compensation (Tables)
 3 Months Ended
Mar. 31, 2018
Share-Based Compensation  
Compensation expense included in net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Compensation expense

 

 

 

 

$
33

$
20

Income tax benefit

 

 

 

 

 
(7)

 
(7)

 

 

 

 

 

 

 

 

 

Total net compensation expense included in net income

 

 

 

 

$
26

$
13

 

 

 

 

 

 

 

 

 

 

Weighted-average fair value of stock options and assumptions used in option-pricing model

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Fair value of options at grant date

 

 

 

 

$
15.83

$
13.80

Dividend yield

 

 

 

 

 
0.1%

 
0.2%

Expected volatility

 

 

 

 

 
26.6%

 
29.2%

Risk-free interest rate

 

 

 

 

 
2.6%

 
1.9%

Expected term (in years)

 

 

 

 

 
4.7

 
4.7

 

 

 

 

 

 

 

 

 

 

Stock option activity

 

 

 

 

 

 

 

 

 

(Options in thousands)

 

 

 

 

 

Number of
Options

 

Weighted-
Average
Exercise
Price

Outstanding at beginning of period

 

 

 

 

 
9,238

$
37.02

Granted

 

 

 

 

 
1,336

 
58.24

Exercised

 

 

 

 

 
(355)

 
(36.57)

Forfeited or expired

 

 

 

 

 
(33)

 
(46.63)

 

 

 

 

 

 

 

 

 

Outstanding at end of period

 

 

 

 

 
10,186

$
39.79

 

 

 

 

 

 

 

 

 

Exercisable at end of period

 

 

 

 

 
6,957

$
34.61

 

 

 

 

 

 

 

 

 

 

Restricted Stock Units  
Share-Based Compensation  
Unit period activity, Nonvested, Weighted average grant date fair value

 

 

 

 

 

 

 

 

 

 

 

Units Payable in Stock

 

Units Payable in Cash

(Shares/Units in thousands)

 

Number of
Shares

 

Weighted-
Average Grant
Date Fair Value

 

Number of
Units

 

Weighted-
Average Grant
Date Fair Value

Outstanding at beginning of period, nonvested

 
668

$
40.55

 
1,263

$
40.75

Granted

 
126

 
58.24

 
270

 
58.24

Vested

 
(174)

 
(36.99)

 
(303)

 
(37.50)

Forfeited

 

—

 

—

 
(13)

 
(42.33)

 

 

 

 

 

 

 

 

 

Outstanding at end of period, nonvested

 
620

$
45.15

 
1,217

$
45.42

 

 

 

 

 

 

 

 

 

 

Fair value of awards vested and cash paid during respective periods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Fair value of awards vested

 

 

 

 

$
24

$
24

Cash paid

 

 

 

 

 
18

 
17

 

 

 

 

 

 

 

 

 

 

Performance Share Units  
Share-Based Compensation  
Unit period activity, Nonvested, Weighted average grant date fair value

 

 

 

 

 

 

 

 

 

(Units in thousands)

 

 

 

 

 

Number of
Units

 

Weighted-
Average
Grant Date
Fair Value

Outstanding at beginning of period, nonvested

 

 

 

 

 
485

$
41.34

Granted

 

 

 

 

 
201

 
58.24

 

 

 

 

 

 

 

 

 

Outstanding at end of period, nonvested

 

 

 

 

 
686

$
46.22

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Earnings Per Share (Tables)
 3 Months Ended
Mar. 31, 2018
Earnings Per Share  
Weighted-average shares outstanding for basic and diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In thousands)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Basic weighted-average shares outstanding

 

 

 

 

 
260,497

 
270,489

Dilutive effect of stock options

 

 

 

 

 
3,175

 
2,341

 

 

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding

 

 

 

 

 
263,672

 
272,830

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Accounts Receivable and Finance Receivables (Tables)
 3 Months Ended
Mar. 31, 2018
Accounts Receivable and Finance Receivables  
Accounts receivable

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Commercial

 

 

 

 

$
1,001

$
1,007

U.S. Government contracts, including foreign military sales

 

 

 

 

 
137

 
383

 

 

 

 

 

 
1,138

 
1,390

Allowance for doubtful accounts

 

 

 

 

 
(28)

 
(27)

Total

 

 

 

 

$
1,110

$
1,363

 

Finance receivables

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Finance receivables

 

 

 

 

$
810

$
850

Allowance for losses

 

 

 

 

 
(29)

 
(31)

 

 

 

 

 

 

 

 

 

Total finance receivables, net

 

 

 

 

$
781

$
819

 

 

 

 

 

 

 

 

 

 

Finance receivables by credit quality indicator and by delinquency aging category

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Performing

 

 

 

 

$
713

$
733

Watchlist

 

 

 

 

 
41

 
56

Nonaccrual

 

 

 

 

 
56

 
61

 

 

 

 

 

 

 

 

 

Nonaccrual as a percentage of finance receivables

 

 

 

 

 
6.91%

 
7.18%

 

 

 

 

 

 

 

 

 

Less than 31 days past due

 

 

 

 

$
751

$
791

31-60 days past due

 

 

 

 

 
28

 
25

61-90 days past due

 

 

 

 

 
22

 
14

Over 90 days past due

 

 

 

 

 
9

 
20

 

 

 

 

 

 

 

 

 

60+ days contractual delinquency as a percentage of finance receivables

 

 

 

 

 
3.83%

 
4.00%

 

 

 

 

 

 

 

 

 

 

Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Recorded investment:

 

 

 

 

 

 

 

 

Impaired loans with related allowance for losses

 

 

 

 

$
18

$
24

Impaired loans with no related allowance for losses

 

 

 

 

 
38

 
70

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

$
56

$
94

 

 

 

 

 

 

 

 

 

Unpaid principal balance

 

 

 

 

$
65

$
106

Allowance for losses on impaired loans

 

 

 

 

 
5

 
6

Average recorded investment

 

 

 

 

 
75

 
92

 

 

 

 

 

 

 

 

 

 

Allowance for losses on finance receivables on an individual and on a collective basis

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Allowance based on collective evaluation

 

 

 

 

$
24

$
25

Allowance based on individual evaluation

 

 

 

 

 
5

 
6

Finance receivables evaluated collectively

 

 

 

 

 
656

 
658

Finance receivables evaluated individually

 

 

 

 

 
56

 
94

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Inventories (Tables)
 3 Months Ended
Mar. 31, 2018
Inventories  
Inventories

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

March 31,
2018

 

December 30,
2017

Finished goods

 

 

 

 

$
1,823

$
1,790

Work in process

 

 

 

 

 
1,512

 
2,238

Raw materials and components

 

 

 

 

 
755

 
804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
4,090

 
4,832

Progress/milestone payments

 

 

 

 

 

—

 
(682)

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

$
4,090

$
4,150

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Warranty Liability (Tables)
 3 Months Ended
Mar. 31, 2018
Warranty Liability  
Changes in warranty liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Beginning of period

 

 

 

 

$
164

$
138

Provision

 

 

 

 

 
16

 
20

Settlements

 

 

 

 

 
(22)

 
(21)

Acquisitions

 

 

 

 

 
1

 
28

Adjustments*

 

 

 

 

 
9

 
(2)

 

 

 

 

 

 

 

 

 

End of period

 

 

 

 

$
168

$
163

 

 

 

 

 

 

 

 

 

* Adjustments include changes to prior year estimates, new issues on prior year sales and currency translation adjustments.                                                                         

 

v3.8.0.1
Derivative Instruments and Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2018
Derivative Instruments and Fair Value Measurements  
Carrying value and estimated fair value of financial instruments

 

 

 

 

 

 

 

 

 

 

March 31, 2018

December 30, 2017

(In millions)

 

Carrying
Value

 

Estimated
Fair Value

 

Carrying
Value

 

Estimated
Fair Value

Manufacturing group

 

 

 

 

 

 

 

 

Debt, excluding leases

$
(3,017)

$
(3,073)

$
(3,007)

$
(3,136)

Finance group

 

 

 

 

 

 

 

 

Finance receivables, excluding leases

 
608

 
628

 
643

 
675

Debt

 
(819)

 
(800)

 
(824)

 
(799)

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Accumulated Other Comprehensive Loss and Other Comprehensive Income (Tables)
 3 Months Ended
Mar. 31, 2018
Accumulated Other Comprehensive Loss and Other Comprehensive Income  
Schedule of components of Accumulated Other Comprehensive Loss

 

 

 

 

 

 

 

 

 

(In millions)

 

Pension and
Postretirement
Benefits
Adjustments

 

Foreign
Currency
Translation
Adjustments

 

Deferred
Gains (Losses)
on Hedge
Contracts

 

Accumulated
Other
Comprehensive
Loss

For the three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

$
(1,396)

$
11

$
10

$
(1,375)

Other comprehensive income before reclassifications

 

—

 
42

 
1

 
43

Reclassified from Accumulated other comprehensive loss

 
31

 

—

 

—

 
31

 

 

 

 

 

 

 

 

 

Other comprehensive income

 
31

 
42

 
1

 
74

 

 

 

 

 

 

 

 

 

End of period

$
(1,365)

$
53

$
11

$
(1,301)

 

 

 

 

 

 

 

 

 

For the three months ended April 1, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

$
(1,505)

$
(96)

$
(4)

$
(1,605)

Other comprehensive income before reclassifications

 

—

 
22

 
2

 
24

Reclassified from Accumulated other comprehensive loss

 
24

 

—

 
2

 
26

 

 

 

 

 

 

 

 

 

Other comprehensive income

 
24

 
22

 
4

 
50

 

 

 

 

 

 

 

 

 

End of period

$
(1,481)

$
(74)

$

—

$
(1,555)

 

 

 

 

 

 

 

 

 

 

Schedule of before and after-tax components of other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

April 1, 2017

(In millions)

 

Pre-Tax
Amount

 

Tax
(Expense)
Benefit

 

After-Tax
Amount

 

Pre-Tax
Amount

 

Tax
(Expense)
Benefit

 

After-Tax
Amount

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

Pension and postretirement benefits adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net actuarial loss*

$
38

$
(9)

$
29

$
34

$
(12)

$
22

Amortization of prior service cost*

 
2

 

—

 
2

 
2

 

—

 
2

Pension and postretirement benefits adjustments, net

 
40

 
(9)

 
31

 
36

 
(12)

 
24

Deferred gains on hedge contracts:

 

 

 

 

 

 

 

 

 

 

 

 

Current deferrals

 
2

 
(1)

 
1

 
3

 
(1)

 
2

Reclassification adjustments

 

—

 

—

 

—

 
2

 

—

 
2

Deferred gains on hedge contracts, net

 
2

 
(1)

 
1

 
5

 
(1)

 
4

Foreign currency translation adjustments

 
40

 
2

 
42

 
21

 
1

 
22

Total

$
82

$
(8)

$
74

$
62

$
(12)

$
50

*These components of other comprehensive income are included in the computation of net periodic pension cost.  See Note 11 of our 2017 Annual Report on Form 10-K for additional information.             

 

v3.8.0.1
Special Charges (Tables)
 3 Months Ended
Mar. 31, 2018
Special Charges  
Schedule of special charges

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

Severance
Costs

 

Asset
Impairments

 

Contract
Terminations
and Other

 

Acquisition
Transaction
Costs

 

Total
Special
Charges

Industrial

$
19

$

—

$
3

$
3

$
25

Textron Aviation

 
1

 
10

 

—

 

—

 
11

Textron Systems

 

—

 

—

 
1

 

—

 
1

 

 

 

 

 

 

 

 

 

 

 

 

$
20

$
10

$
4

$
3

$
37

 

 

 

 

 

 

 

 

 

 

 

 

Schedule of restructuring reserve activity

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

Severance
Costs

 

Contract
Terminations
and Other

 

Total

Balance at December 30, 2017

 

 

 

 

$
24

$
20

$
44

Cash paid

 

 

 

 

 
(10)

 
(4)

 
(14)

Provision for 2016 Plan

 

 

 

 

 

—

 
1

 
1

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2018

 

 

 

 

$
14

$
17

$
31

 

 

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Segment Information (Tables)
 3 Months Ended
Mar. 31, 2018
Segment Information  
Revenues by segment and reconciliation of segment profit to income from continuing operations before income taxes

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(In millions)

 

 

 

 

 

March 31,
2018

 

April 1,
2017

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Textron Aviation

 

 

 

 

$
1,010

$
970

 

 

 

 

 

 

 

 

 

 Bell

 

 

 

 

 
752

 
697

 

 

 

 

 

 

 

 

 

 Textron Systems

 

 

 

 

 
387

 
416

 

 

 

 

 

 

 

 

 

 Industrial

 

 

 

 

 
1,131

 
992

 Finance

 

 

 

 

 
16

 
18

 

 

 

 

 

 

 

 

 

Total revenues

 

 

 

 

$
3,296

$
3,093

 

 

 

 

 

 

 

 

 

Segment Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Textron Aviation

 

 

 

 

$
72

$
36

 

 

 

 

 

 

 

 

 

 Bell

 

 

 

 

 
87

 
83

 

 

 

 

 

 

 

 

 

 Textron Systems

 

 

 

 

 
50

 
20

 

 

 

 

 

 

 

 

 

 Industrial

 

 

 

 

 
64

 
76

 Finance

 

 

 

 

 
6

 
4

 

 

 

 

 

 

 

 

 

Segment profit

 

 

 

 

 
279

 
219

 

 

 

 

 

 

 

 

 

Corporate expenses and other, net

 

 

 

 

 
(27)

 
(27)

 

 

 

 

 

 

 

 

 

Interest expense, net for Manufacturing group

 

 

 

 

 
(34)

 
(34)

Special charges

 

 

 

 

 

—

 
(37)

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

 

 

$
218

$
121

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Revenues (Tables)
 3 Months Ended
Mar. 31, 2018
Revenues  
Schedule of revenue by major product type, customer type and geographic

Our revenues disaggregated by major product type for the three months ended March 31, 2018 are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

Aircraft

 

 

 

 

 

 

 

 

 

 

$
634

Aftermarket parts and services

 

 

 

 

 

 

 

 

 

 

 
376

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Aviation

 

 

 

 

 

 

 

 

 

 

 
1,010

 

 

 

 

 

 

 

 

 

 

 

 

 

Military aircraft and support programs

 

 

 

 

 

 

 

 

 

 

 
487

Commercial helicopters, parts and services

 

 

 

 

 

 

 

 

 

 

 
265

 

 

 

 

 

 

 

 

 

 

 

 

 

Bell

 

 

 

 

 

 

 

 

 

 

 
752

 

 

 

 

 

 

 

 

 

 

 

 

 

Unmanned systems

 

 

 

 

 

 

 

 

 

 

 
170

Marine and land systems

 

 

 

 

 

 

 

 

 

 

 
92

Simulation, training and other

 

 

 

 

 

 

 

 

 

 

 
125

 

 

 

 

 

 

 

 

 

 

 

 

 

Textron Systems

 

 

 

 

 

 

 

 

 

 

 
387

 

 

 

 

 

 

 

 

 

 

 

 

 

Fuel systems and functional components

 

 

 

 

 

 

 

 

 

 

 
655

Specialized vehicles

 

 

 

 

 

 

 

 

 

 

 
348

Tools and test equipment

 

 

 

 

 

 

 

 

 

 

 
128

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

 

 

 

 

 
1,131

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance

 

 

 

 

 

 

 

 

 

 

 
16

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

 

 

 

 

 

 

 

 

$
3,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our revenues by customer type and geographic location for the three months ended March 31, 2018 are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In millions)

 

Textron
Aviation

 

Bell

 

Textron
Systems

 

Industrial

 

Finance

 

Total

Customer type:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$
973

$
252

$
127

$
1,124

$
16

$
2,492

U.S. Government

 
37

 
500

 
260

 
7

 

—

 
804

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$
1,010

$
752

$
387

$
1,131

$
16

$
3,296

 

 

 

 

 

 

 

 

 

 

 

 

 

Geographic location:

 

 

 

 

 

 

 

 

 

 

 

 

United States

$
665

$
509

$
287

$
496

$
7

$
1,964

International

 
345

 
243

 
100

 
635

 
9

 
1,332

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$
1,010

$
752

$
387

$
1,131

$
16

$
3,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 606  
Revenues  
Schedule of impacts of adopting ASU 606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

(In millions)

 

 

 

 

 

As Reported

 

Effect of the
adoption of
ASC 606

 

Under Prior
Accounting

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

 

 

$
1,110

$
212

$
1,322

Inventories

 

 

 

 

 
4,090

 
290

 
4,380

Other current assets

 

 

 

 

 
933

 
(512)

 
421

Property, plant and equipment, net

 

 

 

 

 
2,711

 
6

 
2,717

Other assets

 

 

 

 

 
1,953

 
31

 
1,984

Total Manufacturing group assets

 

 

 

 

 
13,853

 
27

 
13,880

Total assets

 

 

 

 

 
14,968

 
27

 
14,995

Other current liabilities

 

 

 

 

 
2,104

 
134

 
2,238

Total Manufacturing group liabilities

 

 

 

 

 
8,340

 
134

 
8,474

Total liabilities

 

 

 

 

 
9,276

 
134

 
9,410

Retained earnings

 

 

 

 

 
5,642

 
(107)

 
5,535

Total shareholders’ equity

 

 

 

 

 
5,692

 
(107)

 
5,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
March 31, 2018

 

 

 

 

 

(In millions, except per share amounts)

 

 

 

As Reported

 

Effect of the
adoption of
ASC 606

 

Under Prior
Accounting

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing revenues

 

 

$
3,280

$
(221)

$
3,059

Total revenues

 

 

 
3,296

 
(221)

 
3,075

Cost of sales

 

 

 
2,729

 
(198)

 
2,531

Income from continuing operations before income taxes

 

 

 
218

 
(23)

 
195

Income tax expense

 

 

 
29

 
(6)

 
23

Income from continuing operations

 

 

 
189

 
(17)

 
172

Net income

 

 

 
189

 
(17)

 
172

Basic earnings per share - continuing operations

 

 

$
0.73

$
(0.07)

$
0.66

Diluted earnings per share - continuing operations

 

 

 
0.72

 
(0.07)

 
0.65

 

 

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

$
74

$
(17)

$
57

Comprehensive income

 

 

 
263

 
(17)

 
246

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$
189

$
(17)

$
172

Income from continuing operations

 

 

 
189

 
(17)

 
172

Adjustments to reconcile income from continuing operations
to net cash used in operating activities:

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

 
2

 
(6)

 
(4)

Accounts receivable, net

 

 

 
63

 
(9)

 
54

Inventories

 

 

 
(128)

 
(91)

 
(219)

Other assets

 

 

 
(119)

 
75

 
(44)

Other liabilities

 

 

 
(263)

 
48

 
(215)

Net cash used in operating activities of continuing operations

 

 

 
(85)

 

—

 
(85)

 

 

 

 

 

 

 

 

 

 

v3.8.0.1
Basis of Presentation (Details)
$ in Millions
 3 Months Ended
Mar. 31, 2018
USD ($)
item
Apr. 01, 2017
USD ($)
Net proceeds from corporate-owned life insurance policies $ 58 $ 22
Number of borrowing groups | item 2  
ASU 2016-15    
Net proceeds from corporate-owned life insurance policies   22
Net proceeds from corporate-owned life insurance policies reclassified from operating activities   $ (22)
v3.8.0.1
Summary of Significant Accounting Policies Update - ASU 2014-09 (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Dec. 30, 2017
New Accounting Standards      
Retained earnings $ 5,642   $ 5,368
ASC 606 | Effect of adoption of ASC 606      
New Accounting Standards      
Retained earnings $ (107) $ 90  
v3.8.0.1
Summary of Significant Accounting Policies Update - Information regarding significant accounting policies (Details)
 3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 30, 2017
U. S. Government    
Revenue Recognition    
Revenues From Contracts With U. S. Government, Percentage   24.00%
U. S. Government | Maximum    
Revenue Recognition    
Percentage of contract price received for performance based payments on US Government Contracts 90.00%  
Percentage of costs incurred representing progress payments on US Government Contracts 80.00%  
U. S. Government | Fixed-price and fixed-price incentive contracts    
Revenue Recognition    
Percentage of revenue under fixed-price and fixed-price incentive contracts   80.00%
Commercial Contract | Minimum    
Revenue Recognition    
Period of warranty programs 1 year  
Commercial Contract | Maximum    
Revenue Recognition    
Period of warranty programs 5 years  
v3.8.0.1
Summary of Significant Accounting Policies Update - Contracts accounted for under cumulative catch-up method (Details) - Cumulative catch-up method - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Use of Estimates    
Cumulative Catch-Up Adjustments $ 40 $ (12)
Change in Accounting Estimate Financial Effect Increase (Decrease) In Income From Continuing Operations Before Income Taxes 40 (12)
Change in Accounting Estimate Financial Effect Increase (Decrease) In Income From Continuing Operations After Income Taxes $ 30 $ (8)
Change In Accounting Estimate Financial Effect Increase (Decrease) In Earnings Per Share Diluted $ 0.12 $ (0.03)
Gross favorable adjustments $ 56 $ 20
Gross unfavorable adjustments $ 16 32
Gross unfavorable loss adjustments related to Tactical Armoured Patrol Vehicle Program   $ 24
v3.8.0.1
Business Acquisitions (Details) - Arctic Cat Inc - USD ($)
$ / shares in Units, $ in Millions
Mar. 06, 2017
Mar. 31, 2018
Business Acquisitions    
Price per share (in dollars per share) $ 18.50  
Aggregate cash payment $ 316  
Allocation of the purchase price    
Goodwill   $ 230
Intangible assets   75
Trade names    
Allocation of the purchase price    
Indefinite-lived assets   $ 18
v3.8.0.1
Retirement Plans - Net periodic benefit cost (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Net periodic benefit cost    
Other components of net periodic benefit cost (credit) $ (19) $ (8)
Cost of sales 2,729 2,592
Pension Benefits    
Net periodic benefit cost    
Service cost 26 25
Interest cost 77 80
Expected return on plan assets (138) (126)
Amortization of prior service cost (credit) 4 4
Amortization of net actuarial loss 38 34
Net periodic benefit cost 7 17
Postretirement Benefits Other Than Pensions    
Net periodic benefit cost    
Service cost 1 1
Interest cost 2 3
Amortization of prior service cost (credit) (2) (2)
Net periodic benefit cost $ 1 2
Accounting Standards Update 2017-07    
Net periodic benefit cost    
Other components of net periodic benefit cost (credit)   (8)
Cost of sales   $ 8
v3.8.0.1
Share-Based Compensation - Compensation expense and stock options (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Compensation expense included in net income    
Compensation expense $ 33 $ 20
Income tax benefit (7) (7)
Total net compensation expense included in net income $ 26 $ 13
Stock Options    
Share-Based Compensation    
Maximum term of options 10 years  
Vesting period 3 years  
Weighted-average assumptions used in Black-Scholes option-pricing model    
Fair value of options at grant date $ 15.83 $ 13.80
Dividend yield (as a percent) 0.10% 0.20%
Expected volatility (as a percent) 26.60% 29.20%
Risk-free interest rate (as a percent) 2.60% 1.90%
Expected term (in years) 4 years 8 months 12 days 4 years 8 months 12 days
Number of Options    
Outstanding at beginning of period (in shares) 9,238  
Granted 1,336  
Exercised (355)  
Forfeited or expired (33)  
Outstanding at end of period (in shares) 10,186  
Exercisable at end of period (in shares) 6,957  
Weighted-Average Exercise Price    
Outstanding at beginning of period (in dollars per share) $ 37.02  
Granted 58.24  
Exercised (36.57)  
Forfeited or expired (46.63)  
Outstanding at end of period (in dollars per share) 39.79  
Exercisable at end of period (in dollars per share) $ 34.61  
Additional information    
Aggregate intrinsic value of outstanding options $ 195  
Weighted-average remaining contractual life of outstanding stock options 6 years  
Aggregate intrinsic value of exercisable options $ 169  
Weighted-average remaining contractual life of exercisable options 5 years  
Aggregate intrinsic value of options exercised $ 8 $ 17
v3.8.0.1
Share-Based Compensation - Restricted stock units payable in stock and cash (Details)
shares in Thousands
 3 Months Ended
Mar. 31, 2018
$ / shares
shares
Restricted Stock Units Payable in Stock  
Number of Shares/Units  
Outstanding at beginning of period, nonvested (in shares) | shares 668
Granted | shares 126
Vested | shares (174)
Outstanding at end of period, nonvested (in shares) | shares 620
Weighted-Average Grant Date Fair Value  
Outstanding at beginning of period, nonvested (in dollars per share) | $ / shares $ 40.55
Granted | $ / shares 58.24
Vested | $ / shares (36.99)
Outstanding at end of period, nonvested (in dollars per share) | $ / shares $ 45.15
Restricted Stock Units Payable in Cash  
Number of Shares/Units  
Outstanding at beginning of period, nonvested (in shares) | shares 1,263
Granted | shares 270
Vested | shares (303)
Forfeited | shares (13)
Outstanding at end of period, nonvested (in shares) | shares 1,217
Weighted-Average Grant Date Fair Value  
Outstanding at beginning of period, nonvested (in dollars per share) | $ / shares $ 40.75
Granted | $ / shares 58.24
Vested | $ / shares (37.50)
Forfeited | $ / shares (42.33)
Outstanding at end of period, nonvested (in dollars per share) | $ / shares $ 45.42
v3.8.0.1
Share-Based Compensation - Fair value of restricted stock awards vested and cash paid for restricted stock awards and performance share units (Details) - Restricted Stock Units - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Share-Based Compensation    
Fair value of awards vested $ 24 $ 24
Cash paid $ 18 $ 17
v3.8.0.1
Share-Based Compensation - Performance share units (Details) - Performance Share Units - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Share-Based Compensation    
Cash paid $ 11 $ 14
Number of Units    
Outstanding at beginning of period, nonvested (in shares) 485  
Granted 201  
Outstanding at end of period, nonvested (in shares) 686  
Weighted-Average Grant Date Fair Value    
Outstanding at beginning of period, nonvested (in dollars per share) $ 41.34  
Granted 58.24  
Outstanding at end of period, nonvested (in dollars per share) $ 46.22  
v3.8.0.1
Earnings Per Share (Details) - shares
shares in Thousands
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Weighted-average shares outstanding for basic and diluted EPS    
Basic weighted-average shares outstanding 260,497 270,489
Dilutive effect of stock options 3,175 2,341
Diluted weighted-average shares outstanding 263,672 272,830
Anti-dilutive effect of weighted average shares 1,300 1,500
v3.8.0.1
Accounts Receivable and Finance Receivables - Accounts receivable (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Dec. 30, 2017
Accounts Receivable      
Total $ 1,110    
Manufacturing group      
Accounts Receivable      
Accounts Receivable, Gross 1,138   $ 1,390
Allowance for doubtful accounts (28)   (27)
Total 1,110   1,363
Manufacturing group | Commercial      
Accounts Receivable      
Accounts Receivable, Gross 1,001   1,007
Manufacturing group | U. S. Government Contracts, including foreign military sales      
Accounts Receivable      
Accounts Receivable, Gross 137   $ 383
Effect of adoption of ASC 606 | ASC 606      
Accounts Receivable      
Total $ 212 $ (203)  
v3.8.0.1
Accounts Receivable and Finance Receivables - Finance receivables (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 30, 2017
Finance Receivables    
Finance receivables, gross $ 810 $ 850
Allowance for losses (29) (31)
Total finance receivables, net $ 781 $ 819
v3.8.0.1
Accounts Receivable and Finance Receivables - Finance receivables categorized based on credit quality indicators (Details)
$ in Millions
 3 Months Ended
Mar. 31, 2018
USD ($)
item
Dec. 30, 2017
USD ($)
Finance receivables categorized based on the internally assigned credit quality    
Number of loan categories based on key credit quality indicators for individual loan | item 3  
Performing    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables $ 713 $ 733
Watchlist    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables 41 56
Nonaccrual    
Finance receivables categorized based on the internally assigned credit quality    
Total finance receivables $ 56 $ 61
Nonaccrual as a percentage of finance receivables 6.91% 7.18%
Minimum | Nonaccrual    
Finance receivables categorized based on the internally assigned credit quality    
Number of months of contractual delinquency to classify accounts as nonaccrual unless such collection is not doubtful 3 months  
v3.8.0.1
Accounts Receivable and Finance Receivables - Finance receivables by delinquency aging category (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 30, 2017
Finance receivables held for investment by delinquency aging    
60 + days contractual delinquency as a percentage of finance receivables 3.83% 4.00%
Less than 31 days past due    
Finance receivables held for investment by delinquency aging    
Financing receivable held for investment $ 751 $ 791
31-60 days past due    
Finance receivables held for investment by delinquency aging    
Financing receivable held for investment 28 25
61- 90 days past due    
Finance receivables held for investment by delinquency aging    
Financing receivable held for investment 22 14
Over 90 days past due    
Finance receivables held for investment by delinquency aging    
Financing receivable held for investment $ 9 $ 20
v3.8.0.1
Accounts Receivable and Finance Receivables - Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment (Details) - USD ($)
$ in Millions
 3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 30, 2017
Summary of impaired finance receivables, excluding leveraged leases, and the average recorded investment    
Recorded investment, impaired loans with related allowance for losses $ 18 $ 24
Recorded investment, impaired loans with no related allowance for losses 38 70
Recorded investment, Total 56 94
Unpaid principal balance 65 106
Allowance for losses on impaired loans 5 6
Average recorded investment $ 75 $ 92
v3.8.0.1
Accounts Receivable and Finance Receivables - Allowance for losses on finance receivables on an individual and on a collective basis (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 30, 2017
Finance receivables    
Allowance based on collective evaluation $ 24 $ 25
Allowance based on individual evaluation 5 6
Finance receivables evaluated collectively 656 658
Finance receivables evaluated individually $ 56 $ 94
v3.8.0.1
Inventories (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Dec. 30, 2017
Inventories      
Finished goods $ 1,823   $ 1,790
Work in process 1,512   2,238
Raw materials and components 755   804
Inventories, Gross 4,090   4,832
Progress/milestone payments     (682)
Total 4,090   $ 4,150
Effect of adoption of ASC 606 | ASC 606      
Inventories      
Total $ 290 $ (199)  
v3.8.0.1
Warranty Liability (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Changes in warranty liability    
Balance at beginning of period $ 164 $ 138
Provision 16 20
Settlements (22) (21)
Acquisitions 1 28
Adjustments 9 (2)
Balance at end of period $ 168 $ 163
v3.8.0.1
Derivative Instruments and Fair Value Measurements - Assets and liabilities recorded at fair value on a recurring basis (Details) - Manufacturing group - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Dec. 30, 2017
Fair value of derivative instruments    
Forward exchange contracts maximum maturity period 3 years  
Foreign currency exchange contracts    
Fair value of derivative instruments    
Notional amounts $ 484 $ 426
Level 2 | Foreign currency exchange contracts    
Fair value of derivative instruments    
Derivative Asset, Fair Value 11 13
Derivative Liability, Fair Value $ 2 $ 7
v3.8.0.1
Derivative Instruments and Fair Value Measurements - Assets and liabilities not recorded at fair value (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 30, 2017
Manufacturing group | Carrying Value    
Financial instruments not reflected at fair value    
Debt, excluding leases $ (3,017) $ (3,007)
Manufacturing group | Estimated Fair Value    
Financial instruments not reflected at fair value    
Debt, excluding leases (3,073) (3,136)
Finance group    
Financial instruments not reflected at fair value    
Debt (819) (824)
Finance group | Carrying Value    
Financial instruments not reflected at fair value    
Finance receivables, excluding leases 608 643
Debt (819) (824)
Finance group | Estimated Fair Value    
Financial instruments not reflected at fair value    
Finance receivables, excluding leases 628 675
Debt $ (800) $ (799)
v3.8.0.1
Accumulated Other Comprehensive Loss and Other Comprehensive Income - Components of accumulated other comprehensive loss (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Components of Accumulated Other Comprehensive Loss    
Beginning of period $ (1,375) $ (1,605)
Other comprehensive income before reclassifications 43 24
Reclassified from Accumulated other comprehensive loss 31 26
Other comprehensive income 74 50
End of period (1,301) (1,555)
Pension and Postretirement Benefits Adjustments    
Components of Accumulated Other Comprehensive Loss    
Beginning of period (1,396) (1,505)
Reclassified from Accumulated other comprehensive loss 31 24
Other comprehensive income 31 24
End of period (1,365) (1,481)
Foreign Currency Translation Adjustments    
Components of Accumulated Other Comprehensive Loss    
Beginning of period 11 (96)
Other comprehensive income before reclassifications 42 22
Other comprehensive income 42 22
End of period 53 (74)
Deferred Gains (Losses) on Hedge Contracts    
Components of Accumulated Other Comprehensive Loss    
Beginning of period 10 (4)
Other comprehensive income before reclassifications 1 2
Reclassified from Accumulated other comprehensive loss   2
Other comprehensive income 1 $ 4
End of period $ 11  
v3.8.0.1
Accumulated Other Comprehensive Loss and Other Comprehensive Income - Before and after-tax components of other comprehensive income (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Pension and postretirement benefits adjustments, pre-tax:    
Amortization of net actuarial loss, pre-tax $ 38 $ 34
Amortization of prior service cost, pre-tax 2 2
Pension and postretirement benefits adjustments, net, pre-tax 40 36
Deferred gains on hedge contracts, pre-tax:    
Current deferrals, pre-tax 2 3
Reclassification adjustments, pre-tax   2
Deferred gains on hedge contracts, net, pre-tax 2 5
Foreign currency translation adjustments, pre-tax 40 21
Other comprehensive income (loss), pre-tax 82 62
Pension and postretirement benefits adjustments, tax:    
Amortization of net actuarial loss, tax (9) (12)
Pension and postretirement benefits adjustments, net, tax (9) (12)
Deferred gains on hedge contracts, tax:    
Current deferrals, tax (1) (1)
Deferred gains on hedge contracts, net, tax (1) (1)
Foreign currency translation adjustments, tax 2 1
Other comprehensive income (loss), tax (8) (12)
Pension and postretirement benefits adjustments, after-tax:    
Amortization of net actuarial loss, after-tax 29 22
Amortization of prior service cost, after-tax 2 2
Pension and postretirement benefits adjustments, net, after-tax 31 24
Deferred gains on hedge contracts, after-tax:    
Current deferrals, after-tax 1 2
Reclassification adjustments, after-tax   2
Deferred gains on hedge contracts, net, after-tax 1 4
Foreign currency translation adjustments, after-tax 42 22
Other comprehensive income $ 74 $ 50
v3.8.0.1
Special Charges - Restructuring plans and special charges (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Special Charges    
Special charges $ 0 $ 37
Severance Costs    
Special Charges    
Special charges   20
Contract Terminations and Other    
Special Charges    
Special charges   4
Textron Systems    
Special Charges    
Special charges   1
Textron Systems | Contract Terminations and Other    
Special Charges    
Special charges   1
Textron Aviation    
Special Charges    
Special charges   11
Textron Aviation | Severance Costs    
Special Charges    
Special charges   1
Industrial    
Special Charges    
Special charges   25
Industrial | Severance Costs    
Special Charges    
Special charges   19
Industrial | Contract Terminations and Other    
Special Charges    
Special charges   3
Asset Impairments    
Special Charges    
Special charges   10
Asset Impairments | Textron Aviation    
Special Charges    
Special charges   10
Acquisition Transaction Costs    
Special Charges    
Special charges   3
Acquisition Transaction Costs | Industrial    
Special Charges    
Special charges   $ 3
v3.8.0.1
Special Charges - Restructuring reserve activity and total expected cash outlay (Details)
$ in Millions
 3 Months Ended
Mar. 31, 2018
USD ($)
Special Charges  
Remaining expected cash payments for restructuring activities $ 31
Restructuring reserve activity  
Balance at beginning of period 44
Cash paid (14)
Provision for 2016 Plan 1
Balance at end of period 31
Severance Costs  
Restructuring reserve activity  
Balance at beginning of period 24
Cash paid (10)
Balance at end of period 14
Contract Terminations and Other  
Restructuring reserve activity  
Balance at beginning of period 20
Cash paid (4)
Provision for 2016 Plan 1
Balance at end of period $ 17
v3.8.0.1
Income Taxes (Details)
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Income Taxes    
Effective income tax rate (as a percent) 13.30% 17.40%
U.S. federal statutory income tax rate (as a percent) 21.00% 35.00%
v3.8.0.1
Segment Information - Operating and reportable segments (Details)
 3 Months Ended
Mar. 31, 2018
segment
Operating and reportable business segments  
Number of business operating segments 5
Number of reportable business segments 5
v3.8.0.1
Segment Information - Reconciliation of segment profit to income from continuing operations before income taxes (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Revenues    
Total revenues $ 3,296 $ 3,093
Reconciliation of Operating Profit (Loss) from Segments to Consolidated    
Special charges 0 (37)
Income from continuing operations before income taxes 218 121
Operating Segment    
Segment Profit    
Segment Profit 279 219
Corporate    
Reconciliation of Operating Profit (Loss) from Segments to Consolidated    
Corporate expenses and other, net (27) (27)
Textron Aviation    
Reconciliation of Operating Profit (Loss) from Segments to Consolidated    
Special charges   (11)
Textron Systems    
Reconciliation of Operating Profit (Loss) from Segments to Consolidated    
Special charges   (1)
Industrial    
Reconciliation of Operating Profit (Loss) from Segments to Consolidated    
Special charges   (25)
Finance    
Revenues    
Financial Services Revenues 16  
Finance | Operating Segment    
Segment Profit    
Segment Profit 6 4
Manufacturing group | Reconciling Items    
Reconciliation of Operating Profit (Loss) from Segments to Consolidated    
Interest expense, net for Manufacturing group (34) (34)
Manufacturing group | Textron Aviation    
Revenues    
Total revenues 1,010 970
Manufacturing group | Textron Aviation | Operating Segment    
Segment Profit    
Segment Profit 72 36
Manufacturing group | Bell    
Revenues    
Total revenues 752 697
Manufacturing group | Bell | Operating Segment    
Segment Profit    
Segment Profit 87 83
Manufacturing group | Textron Systems    
Revenues    
Total revenues 387 416
Manufacturing group | Textron Systems | Operating Segment    
Segment Profit    
Segment Profit 50 20
Manufacturing group | Industrial    
Revenues    
Total revenues 1,131 992
Manufacturing group | Industrial | Operating Segment    
Segment Profit    
Segment Profit 64 76
Finance group | Finance    
Revenues    
Financial Services Revenues $ 16 $ 18
v3.8.0.1
Revenues (Details)
$ in Millions
 3 Months Ended
Mar. 31, 2018
USD ($)
Revenues  
Total revenues $ 3,296
United States  
Revenues  
Total revenues 1,964
International  
Revenues  
Total revenues 1,332
Commercial  
Revenues  
Total revenues 2,492
U.S. Government  
Revenues  
Total revenues 804
Textron Aviation  
Revenues  
Total revenues 1,010
Textron Aviation | United States  
Revenues  
Total revenues 665
Textron Aviation | International  
Revenues  
Total revenues 345
Textron Aviation | Commercial  
Revenues  
Total revenues 973
Textron Aviation | U.S. Government  
Revenues  
Total revenues 37
Textron Aviation | Aircraft  
Revenues  
Total revenues 634
Textron Aviation | Aftermarket parts and services  
Revenues  
Total revenues 376
Bell  
Revenues  
Total revenues 752
Bell | United States  
Revenues  
Total revenues 509
Bell | International  
Revenues  
Total revenues 243
Bell | Commercial  
Revenues  
Total revenues 252
Bell | U.S. Government  
Revenues  
Total revenues 500
Bell | Military aircraft and support programs  
Revenues  
Total revenues 487
Bell | Commercial helicopters, parts and services  
Revenues  
Total revenues 265
Textron Systems  
Revenues  
Total revenues 387
Textron Systems | United States  
Revenues  
Total revenues 287
Textron Systems | International  
Revenues  
Total revenues 100
Textron Systems | Commercial  
Revenues  
Total revenues 127
Textron Systems | U.S. Government  
Revenues  
Total revenues 260
Textron Systems | Unmanned systems  
Revenues  
Total revenues 170
Textron Systems | Marine and land systems  
Revenues  
Total revenues 92
Textron Systems | Simulation, training and other  
Revenues  
Total revenues 125
Industrial  
Revenues  
Total revenues 1,131
Industrial | United States  
Revenues  
Total revenues 496
Industrial | International  
Revenues  
Total revenues 635
Industrial | Commercial  
Revenues  
Total revenues 1,124
Industrial | U.S. Government  
Revenues  
Total revenues 7
Industrial | Fuel systems and functional components  
Revenues  
Total revenues 655
Industrial | Specialized vehicles  
Revenues  
Total revenues 348
Industrial | Tools and test equipment  
Revenues  
Total revenues 128
Finance  
Revenues  
Finance Revenue 16
Finance | United States  
Revenues  
Finance Revenue 7
Finance | International  
Revenues  
Finance Revenue 9
Finance | Commercial  
Revenues  
Finance Revenue $ 16
v3.8.0.1
Revenues - Remaining Performance Obligations (Details)
$ in Billions
Mar. 31, 2018
USD ($)
Revenues  
Remaining performance obligations $ 6.5
v3.8.0.1
Revenues - Remaining Performance Obligations & Revenue Expected to be recognized (Details)
Mar. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01  
Remaining Performance Obligation, Expected Timing of Satisfaction  
Percentage of remaining performance obligation expected to be recognized in period 90.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-05  
Remaining Performance Obligation, Expected Timing of Satisfaction  
Percentage of remaining performance obligation expected to be recognized in period 7.00%
v3.8.0.1
Revenues - Contract assets and liabilities (Details) - USD ($)
$ in Millions
 3 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Contract assets and liabilities    
Contract assets $ 500  
Contract liabilities 1,100  
Revenue recognized included in contract liabilities $ 322  
Effect of adoption of ASC 606 | ASC 606    
Contract assets and liabilities    
Contract assets   $ 429
Contract liabilities   $ 1,000
v3.8.0.1
Revenues - Reconciliation of ASC 606 to Prior Accounting Standards (Details) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended
Mar. 31, 2018
Apr. 01, 2017
Dec. 31, 2017
Dec. 30, 2017
Consolidated Balance Sheets        
Accounts receivable, net $ 1,110      
Inventories 4,090     $ 4,150
Other current assets 933      
Property, plant and equipment, net 2,711      
Other assets 1,953      
Total assets 14,968     15,340
Other current liabilities 2,104      
Total liabilities 9,276     9,693
Retained earnings 5,642     5,368
Total shareholders' equity 5,692     5,647
Consolidated Statements of Operations        
Total revenues 3,296      
Cost of sales 2,729      
Income from continuing operations before income taxes 218 $ 121    
Income tax expense 29 21    
Income from continuing operations 189 100    
Net income $ 189 $ 101    
Basic earnings per share - continuing operations $ 0.73 $ 0.37    
Diluted earnings per share - continuing operations $ 0.72 $ 0.37    
Consolidated Statements of Comprehensive Income        
Other comprehensive income $ 74 $ 50    
Comprehensive income 263 151    
Consolidated Statements of Cash flows        
Net income 189 101    
Income from continuing operations 189      
Adjustments to reconcile income from continuing operations to net cash used in operating activities:        
Deferred income taxes 2 13    
Accounts receivable, net 63 (103)    
Inventories (128) (122)    
Other assets (119) (30)    
Other liabilities (263) (158)    
Net cash provided by (used in) operating activities of continuing operations (85) (191)    
Under Prior Accounting        
Consolidated Balance Sheets        
Accounts receivable, net 1,322      
Inventories 4,380      
Other current assets 421      
Property, plant and equipment, net 2,717      
Other assets 1,984      
Total assets 14,995      
Other current liabilities 2,238      
Total liabilities 9,410      
Retained earnings 5,535      
Total shareholders' equity 5,585      
Consolidated Statements of Operations        
Total revenues 3,075      
Cost of sales 2,531      
Income from continuing operations before income taxes 195      
Income tax expense 23      
Income from continuing operations 172      
Net income $ 172      
Basic earnings per share - continuing operations $ 0.66      
Diluted earnings per share - continuing operations $ 0.65      
Consolidated Statements of Comprehensive Income        
Other comprehensive income $ 57      
Comprehensive income 246      
Consolidated Statements of Cash flows        
Net income 172      
Income from continuing operations 172      
Adjustments to reconcile income from continuing operations to net cash used in operating activities:        
Deferred income taxes (4)      
Accounts receivable, net 54      
Inventories (219)      
Other assets (44)      
Other liabilities (215)      
Net cash provided by (used in) operating activities of continuing operations (85)      
ASC 606 | Effect of adoption of ASC 606        
Consolidated Balance Sheets        
Accounts receivable, net 212   $ (203)  
Inventories 290   (199)  
Other current assets (512)      
Property, plant and equipment, net 6      
Other assets 31      
Total assets 27      
Other current liabilities 134      
Total liabilities 134      
Retained earnings (107)   $ 90  
Total shareholders' equity (107)      
Consolidated Statements of Operations        
Total revenues (221)      
Cost of sales (198)      
Income from continuing operations before income taxes (23)      
Income tax expense (6)      
Income from continuing operations (17)      
Net income $ (17)      
Basic earnings per share - continuing operations $ (0.07)      
Diluted earnings per share - continuing operations $ (0.07)      
Consolidated Statements of Comprehensive Income        
Other comprehensive income $ (17)      
Comprehensive income (17)      
Consolidated Statements of Cash flows        
Net income (17)      
Income from continuing operations (17)      
Adjustments to reconcile income from continuing operations to net cash used in operating activities:        
Deferred income taxes (6)      
Accounts receivable, net (9)      
Inventories (91)      
Other assets 75      
Other liabilities 48      
Manufacturing group        
Consolidated Balance Sheets        
Accounts receivable, net 1,110     1,363
Inventories 4,090     4,150
Other current assets 933     435
Property, plant and equipment, net 2,711     2,721
Other assets 1,953     2,059
Total assets 13,853     14,171
Other current liabilities 2,104     2,441
Total liabilities 8,340     $ 8,740
Consolidated Statements of Operations        
Income from continuing operations 179 94    
Adjustments to reconcile income from continuing operations to net cash used in operating activities:        
Deferred income taxes 2 13    
Accounts receivable, net 63 (103)    
Inventories (128) (122)    
Other assets (118) (29)    
Other liabilities (259) (151)    
Net cash provided by (used in) operating activities of continuing operations (53) $ (165)    
Manufacturing group | Under Prior Accounting        
Consolidated Balance Sheets        
Total assets 13,880      
Total liabilities 8,474      
Manufacturing group | ASC 606 | Effect of adoption of ASC 606        
Consolidated Balance Sheets        
Total assets 27      
Total liabilities 134      
Manufacturing        
Consolidated Statements of Operations        
Total revenues 3,280      
Manufacturing | Under Prior Accounting        
Consolidated Statements of Operations        
Total revenues 3,059      
Manufacturing | ASC 606 | Effect of adoption of ASC 606        
Consolidated Statements of Operations        
Total revenues $ (221)      
v3.8.0.1
Subsequent Event (Details)
$ in Millions
Apr. 18, 2018
USD ($)
Subsequent Event | Tools and Test Equipment product line  
Subsequent Event  
Cash consideration to be received $ 810